As the head of Yahoo’s media and advertising services, Levinsohn had been striking more exclusive online video deals featuring well-known talents such as former CBS news anchor Katie Couric and actors Tom Hanks and Jeff Goldblum. Yahoo has also been gearing up to increase its coverage of the Summer Olympics and U.S. presidential election in the fall.
Yahoo’s annual revenue has fallen from a peak of $7.2 billion in 2008 to $5 billion last year. Advertisers aren’t spending as much money at Yahoo largely because they have been getting better returns at Internet search leader Google and at Facebook, where people have are spending more of their online time. In March, for instance, Web surfers in the U.S. spent an average of six-and-half hours on Facebook compared to four-and-three-quarters hours on Google services and three-and-half hours on Yahoo.
Despite the downturn in revenue, Yahoo has become more profitable by cutting costs under both Bartz and Thompson. After laying off 2,000 workers last month, Thompson had started to identify about 50 Yahoo services that he intended to close or sell. Levinsohn, who was working closely with Thompson, hasn’t indicated if he still intends get rid of all those services.
Although Levinsohn has been labeled as interim CEO, Yahoo’s board is probably hoping he performs well enough to be appointed the company’s permanent leader, said Gayle Mattson, an executive vice president for executive search firm DHR International.
“I am sure the board is auditioning him because to try to bring someone from outside the company right would be a total disaster,” Mattson said.
Levinsohn isn’t getting a raise with his expanded responsibilities, Yahoo said Monday. His salary as a Yahoo executive vice president in charge of media content and advertising remains at $700,000 salary with an annual bonus of up to $840,000. Yahoo gave Morse, a 25 percent raise that lifted his salary to $750,000 when he was named Yahoo’s interim CEO after Bartz’s ouster.
Loeb, who runs the Third Point LLC hedge fund, has muscled his way on to a Yahoo board that has undergone a radical makeover. All but three of the directors have been appointed since February. One of the recent appointees, former technology executive Alfred Amoroso, is the new chairman of the board, but Loeb “is clearly calling the shots right now,” Schachter said.
Loeb has gained investors’ respect with scathing public criticism that eventually pressured Yahoo to get rid of the remaining directors that sat on the board when the company committed perhaps its biggest blunder _ a squandered opportunity to sell itself to Microsoft Corp. for $33 per share, or $47.5 billion, per share, four years ago. Yahoo’s stock price hasn’t traded above $20 since September 2008.
The breakdown in Microsoft negotiations triggered a shareholder mutiny that culminated in billionaire investor Carl Icahn and two of his allies being appointed to Yahoo’s board in 2008. Icahn resigned after just 15 months on the board.
Loeb is expected to play a more influential role in the boardroom than Icahn did, particularly in Yahoo’s on-again, off-again negotiations to sell part of its roughly 40 percent stake in Alibaba, one of the hottest companies in China’s rapidly growing Internet market. Yahoo had been discussing a complex deal with Alibaba that would have avoided incurring a large tax deal, but those talks unraveled shortly after Thompson’s hiring.
Thompson had renewed the Alibaba discussions and, last month, expressed some hope that a deal would get done this year.
Selling part of the Alibaba stake would be welcomed by Loeb and other major shareholders because it would probably produce a multibillion-dollar windfall. As of March 31, Yahoo estimated its holdings in Alibaba were worth $14 billion. That indicates investors see little remaining value in the rest of Yahoo, which currently has a market value of $19 billion.