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Former PayPal president Scott Thompson has left Yahoo, which he has led as CEO since January.
May 13 -
Yahoo is on the cusp of reinventing itself, potentially as an important payments provider that could rival not only PayPal, but Visa and MasterCard.
April 11
The
Payments are widely viewed as critical to turning Yahoo's fortunes around. Yahoo sits in the center of at least three converging channels, which are e-commerce, mobile commerce and digital transactions, experts say. But it lags major competitors like Google (GOOG) and Amazon.com (AMZN) in payments.
Yahoo's chief rival, Google already has a prominent payment brand in Google Wallet, which last year absorbed the userbase of the earlier Google Checkout product. Google further extended its ambitions in April when it bought TxVia, a prepaid card technology company in New York.
Yahoo must also compete with major ecommerce companies like Amazon.com and eBay (EBAY), the parent company of PayPal, which Thompson led until he came to Yahoo in January.
"Yahoo is stuck in a 1996 payments mindset, with other competitors a whole generation ahead," says Brian Riley, research manager in the cards and retail banking practice at CEB TowerGroup.
Yahoo said it would not provide further comment beyond its Sunday announcment of Thompson's departure. Yahoo did not give a reason for Thompson leaving the company, though Thompson faced recent scrutiny for misstating his academic credentials.
Thompson became PayPal's president in 2008. He helped transform PayPal into an important presence with mobile and point of sale transactions. Annual revenue at PayPal also more than doubled to $4 billion under Thompson's guidance.
Yahoo's interim chief executive Ross Levinsohn, formerly Yahoo's global head of media, is by most accounts the polar opposite of Thompson. Levinsohn has plenty of media experience but almost no experience in payments. He was previously president of Fox Interactive Media, a unit of News Corp., and has held senior positions at the former search engine AltaVista and at HBO.
Sam Shrauger, who was PayPal's vice president of global product and experience,
Shrauger helped build PayPal's merchant services business and helped integrate products like Bill Me Later, which lets consumers pay for items online using a temporary credit. Bill Me Later's instant-credit system also provides a float for PayPal's wallet at the point of sale.
"If Yahoo's payment initiatives come to a standstill while they pick a new CEO, then there is little Shrauger can do despite his strengths and successes, and there is a risk to Yahoo that he might leave," says Andy Schmidt, the research director for global payments at CEB TowerGroup.
Yahoo has had a disjointed relationship with payments. In 2007, it
The separation of Alipay, the largest third-party payments provider operating in China, distanced Yahoo from a prominent payments company.
Thompson's departure follows weeks of maneuvering by hedge fund Third Point, which discovered an error on the executive's resume. Thompson, who holds a degree in accounting from Stonehill College, falsely listed an additional degree in computer engineering from the same school.
Third Point used the inaccuracy as ammunition in its proxy battle to place its own members on Yahoo's board.
According to a negotiated deal, three of Third Point's nominees will join Yahoo's board on Wednesday. Third Point owns nearly 6% of Yahoo's common stock, according to Yahoo.
Thompson, 54, was also recently diagnosed with thyroid cancer,
Yahoo has struggled to fill its CEO position, which has been open since September, following the ouster of Carol Bartz, who had been unable to turn the ailing company around during her three-year tenure.
"With Scott Thompson in charge, we could have seen Yahoo headed into payments, but with him leaving, the odds are lower, so it makes PayPal even more unique and more unlikely to be challenged by [Yahoo's] senior strategy in the near future," says Gwenn Bezard, a research director at Aite Group.
