Fred Fleitz, managing editor of LIGNET and a long-time former CIA analyst, warns in a special interview of the danger of miscalculation on Iran as a European oil embargo threatens to tighten the noose around its neck.
An oil refinery on Iran’s Lavan Island in the Persian Gulf. Lavan Island is one of Iran’s four major terminals for export of crude oil. (BEHROUZ MEHRI/AFP/Getty Images)
PayPal President Scott Thompson in an undated photo. REUTERS/PayPal
SAN FRANCISCO (Reuters) - Yahoo Inc named PayPalPresident Scott Thompson as its chief executive on Wednesday, hoping the well-regarded Internet technology and e-commerce expert will replicate his success at eBay Inc and turn around the struggling company. Thompson, credited with driving growth at eBay's online payments division PayPal, joins Yahoo during a period of turmoil, as the company plows ahead with a strategic review in which discussions have included the possibility of being sold, taken private or broken up.
Yahoo shares finished Wednesday's regular trading session down 3 percent at $15.78, as Wall Street assessed how Thompson's hiring would affect the hopes of some investors that Yahoo would be sold or spin off its Asian assets, as well as how Thompson's background fits in with Yahoo's core online media business.
"It's a positive outcome, but not as positive as a sale of the company," said Lawrence Haverty, a fund manager with GAMCO investors, which owns Yahoo shares.
"The risk element is that his background was in payments. And this is not a payment company; it's a marketing, technology company," he said.
Thompson, a former Visa payments software platform designer, joins the company four months after the firing of previous CEO Carol Bartz as the one-time Web powerhouse Yahoo struggles to compete with newer heavyweights Google Inc and Facebook.
"I'm from Boston, we're the underdogs since the beginning of time. Hopefully that spirit has held through. I like doing complicated, very difficult, very challenging things," Thompson said in an interview.
Thompson, who takes over on January 9, will also join Yahoo's board. He ran eBay's PayPal since early 2008, and was previously its chief technology officer. Under his leadership, Yahoo said PayPal increased its user base from 50 million to more than 104 million active users. PayPal processed $29 billion in payments in the third quarter of 2011.
EBay's shares fell 3.8 percent as analysts said the online retailer would miss the respected Internet executive.
EBay Chief Executive John Donahoe told staff in an internal memo that Thompson's move was a "shock."
"Scott informed me Tuesday afternoon, saying that despite his passion for PayPal, this was an opportunity he felt he had to take," Donahoe said.
At PayPal, Thompson was known as a leader who was not afraid to make bold strategic bets. He came up with the idea of taking PayPal beyond its online stronghold and into the physical world by allowing PayPal payments in retail stores -- an opportunity analysts believe could prove much bigger than its existing business.
That kind of strategic risk-taking could be particularly useful at Yahoo. The Sunnyvale, California-based company, whose services include mail, search, news and photo-sharing, was a Web pioneer that grew rapidly in the 1990s. But in recent years, Yahoo has struggled to maintain its relevance and advertising revenue in the face of competition from rivals Google and Facebook.
"They really need that push to the next level," said Ryan Jacob, chairman and chief investment officer of Jacob Funds, which includes the Jacob Internet Fund and counts Yahoo as one of its largest positions.
"Ideally what they would do is rather than just follow where today's Internet leaders are moving, try to really be on that front edge," he said, citing Yahoo's need be better positioned in mobile, social networking and other fast-growing technology trends.
During a conference call on Wednesday, Thompson cited mobile as a key area that he expected to focus on at Yahoo, and he said he viewed the company's treasure trove data about its users as one of Yahoo's key assets. But he said it was too early to comment on his overall vision for the company.
NOT GOING PRIVATE Yahoo Chairman Roy Bostock told analysts on the joint conference call with Thompson that Yahoo has no intention of being taken private.
"If you want to look at it in a practical way, if you and I were to sit down tomorrow and say let's take this Company private, I think we have one hell of a challenge on our hands to do that," said Bostock.
The decision to appoint a new CEO is not expected to impact the strategic review, which includes Yahoo's ongoing dialogue with both China's Alibaba Group and its Japanese affiliate to slash its stakes in the two companies, sources close to the matter said.
Under the "cash rich split" plan being discussed, Yahoo would effectively transfer most of its 40 percent slice of Alibaba back to the Chinese company and all of its stake in Yahoo Japan to Softbank Corp in return for cash and assets.
A preliminary term sheet has been drawn up that broadly outlines the deal concept, said one of the sources.
"Everyone seems to be in agreement over it," the source said.
The question is whether a definitive agreement can be signed between the parties ahead of March 25 deadline when activist shareholders can submit director nominees to Yahoo's board and waging a proxy battle.
Alibaba has also hired a Washington lobbying firm in a sign that the Chinese e-commerce company would be willing to make a bid for all of Yahoo in the event that talks to unwind their Asian partnership fail.
"If they can successfully complete the Asian asset transactions, in a way that is beneficial to Yahoo shareholders, I think it will buy them some time and they'll have a chance to build for growth," said Jacob, of the Jacob Funds.
In 2008, Yahoo rejected an unsolicited takeover bid from Microsoft Corp worth about $44 billion. Its share price was subsequently pummeled during the global financial crisis and its current market value is about $20 billion.
Co-founder Jerry Yang stepped down in late 2008 after being severely criticized by investors for his handling of the bid. The company cut thousands of jobs and later agreed to an advertising and search partnership with Microsoft.
RALLYING THE TROOPS
One of Thompson's first orders of business at Yahoo may be to try to rebuild morale inside the nearly 14,000-person company, which has been beset by layoffs, management reorganizations and a revolving door of executive departures.
The company cannot compete with hot Web companies such as Facebook and Twitter when it comes to luring the most sought-after engineers and many of the staffers within the company have tired of the seemingly endless reorganizations and lost their competitive drive, said one Yahoo employee, speaking anonymously.
"There are fundamental cultural issues, there are people who are not motivated to do big things," the Yahoo employee said.
Thompson, 54, who speaks in a thick Boston accent, is described as calm under pressure and adept at energizing his team.
One of his signature management styles involves creating different groups, each tasked with achieving the same goal and pitting them against each other, said one PayPal manager who asked to remain anonymous.
"He's not afraid to experiment," the person said.
"He'll build teams that are both going after the same thing," the person said. The idea is "you guys go after the same thing, whoever does it better wins," the PayPal manager explained.
Thompson said in an interview that Yahoo was in a strong position with its large user base of more than 700 million people.
"The traffic itself that these sites generate is a very big number, the collection of assets that sit below this core business I think are not well understood and clearly have tremendous opportunity to be leveraged as we look forward to the future." (Additional reporting by Alistair Barr and Nadia Damouni; editing by Maureen Bavdek, Gunna Dickson, Bernard Orr and Andre Grenon)
Holy Revenge: Ex Murdoch editor hired by rival NY tabloid
By Paul Thomasch and Georgina Prodhan |Reuters –
Former News of the World editor Colin Myler arrives to give evidence at the Leveson …
NEW YORK/LONDON (Reuters) - The Daily News of New York has hired former News of the World editor Colin Myler as its editor in chief, an appointment that is certain to add spice to the newspaper's long and heated rivalry with Rupert Murdoch's New York Post.
Myler, who replaces Kevin Convey, had long been a close lieutenant of Murdoch, serving as managing editor of the New York Post before he was brought to London in 2007 to clean up the scandal-plagued News of the World.
The hiring of Myler, 59, means he will now be in direct competition with Murdoch, whose News Corp. owns the New York Post and owned the News of the World until it closed this past summer.
Myler will start his job January 10.
Publisher Mort Zuckerman, who announced the hiring in a memo on Wednesday, denied that the decision had anything to do with striking a blow against either the New York Post or Murdoch.
"I have lot of respect and affection for Rupert," he said in an interview. "I don't do anything in business to either hurt him or help him."
The Daily News, the largest-circulation daily newspaper in New York, has been engaged in a long, expensive and often nasty competition with the New York Post. Myler served as executive editor and managing editor of the New York Post from 2001 to 2007.
"He was quite successful at the Post," said British media commentator Steve Hewlett. "He knows the market very well. He's won his spurs in that marketplace, and also of course he has no reason to thank Rupert Murdoch for anything now."
Myler's relationship with the Murdoch family, and Rupert's son James in particular, deteriorated over recent months into finger-pointing and accusations in the aftermath of the News of the World hacking scandal.
Myler was brought to News of the World to set straight a tabloid that was already under intense scrutiny from politicians and the public. Earlier that year, one of the paper's employees had been jailed for hacking into voice mail accounts.
Journalists who previously worked with Myler described him as a demanding editor, one with high standards.
"I quite liked him really, but he could be quite scary," said one former News of the World journalist. "My impression was he played things straight. If he felt you'd done something and ballsed it up he wouldn't forget it. If he felt you'd been incompetent over something he wouldn't forget it."
In 2011, more disclosures came to light about earlier episodes of phone hacking at News of the World, and News Corp eventually made the decision to shut down the 168-year old tabloid.
In statements to the parliamentary committee investigating the events, Myler has contradicted James Murdoch's account of how much he knew about the breadth of hacking at the paper.
Myler told the committee that he warned the younger Murdoch in early 2008 that the hacking went beyond a single reporter, testimony that appeared to be backed up by a series of emails.
James Murdoch, whose handling of the phone hacking crisis has raised questions about his status as presumptive heir to his father, said he did not read the emails.
"Myler's version of events has been substantiated by evidence," said London-based media analyst Clair Enders.
"It is entirely possible that James Murdoch did not read those emails, but Myler did bring the matter to his attention. It dispelled the cloud that was hanging over him in relation to whether he had gone off on his own tangent and was culpable in some way."
(Reporting By Paul Thomasch in New York and Georgina Prodhan in London; Editing by Carol Bishopric, Steve Orlofsky and Ed Lane)