Yahoo ended the four-month vacuum left by the sacking of chief executive Carol Bartz as it chose Scott Thompson, president of online payments service PayPal, as the next head of the US internet media company.
The news drew muted support on Wall Street, with acknowledgement for Mr Thompson’s strong technology credentials tempered by his lack of experience in the media and advertising businesses.
The timing of the announcement also added a fresh twist to negotiations that have been going on behind the scenes as Yahoo pursues potential deals that could reshape the company and lead to it shedding its valuable Asian holdings, though the company said the talks would not be delayed or derailed.
Yahoo has suffered from years of low growth and a sagging stock price after being outpaced by younger internet companies such as Facebook and Twitter. However, Mr Thompson said Yahoo had a “solid foundation” on which to build, including more than 700m users, and promised to make a return to high growth his top priority.
The emphasis on growth prompted some analysts to question whether Yahoo would relax its recent focus on boosting profit margins.
However, in an interview with the Financial Times, Mr Thompson said that revived growth was the key to rewarding shareholders in both the short and long term, since it would position Yahoo for the next big growth markets online.
Roy Bostock, Yahoo’s chairman, defended Mr Thompson’s lack of experience in the media industry and insisted that the appointment would not delay or change the direction of the company’s strategic review.
However, one shareholder said that unveiling a new chief now appeared to indicate that one of the options under review – to sell a large minority stake to a private equity investor – had taken a back seat.
Yahoo had earlier been looking to an alliance with a private equity firm as a way to inject new management into the group, according to people close to the company.
Mr Bostock said that Mr Thompson would focus on the core of the business, while the board would continue to review strategic options, including potential disposals.
Although not widely known outside the payments industry, Mr Thompson, who takes up his post on January 9, has won backing on Wall Street for his successful leadership of PayPal, which is owned by Ebay.
The online business, which has 104m active users, doubled its revenues during his three years at the helm to more than $4bn last year.
Tim Morse, who has been acting chief executive of Yahoo, will resume his position as chief financial officer.