Yahoo! Needs to Keep CEO Ross Levinsohn

Now that Scott Thompson is out as CEO of Yahoo! (NASDAQ: YHOO) and Ross Levinsohn is in as interim chief executive, the newly constituted board needs to keep its new leader. Levinsohn, the most recent of a string of five chief executives, is more qualified to run the firm than any of his predecessors, and his skills are almost ideal for pulling the company out of its troubles.

The board will have to conduct a search to show that it served shareholder interests, but the search show be a brief one and largely symbolic. Yahoo! cannot stand another change in leadership — particularly if it brings in a chief executive with no immediate experience with the portal firm’s “culture,” problems and strengths.

It is a wonder that Levinsohn was not elevated before the board picked Thompson. The temptation to add a leader who has run a successful company — the PayPal division of eBay (NASDAQ: EBAY) — may have been too great. It may have been considered a bad idea to choose someone, like Levinsohn, who worked for Carol Bartz, She was dismissed before Thompson was hired.

Levinsohn ran the interactive division of News Corp. (NASDAQ: NWSA), one of the largest media companies in the world. He was at the company when News Corp. bought MySpace, a decision the firm later regretted. But the decision was Rupert Murdoch’s; Levinsohn cannot be blamed for the mistake. Levinsohn also ran the digital businesses of CBS (NYSE: CBS) Sportsline and worked at HBO.

Levinsohn has had a long line of management positions at media companies, and his is the right kind of experience for Yahoo! He has overseen content and advertising operations, which by their natures involve working with engineers. Levinsohn also has worked in a venture capital operations as the leader of Fuse Capital, and he has M&A experience. That could prove critical as Yahoo! decides what to do with its stakes in Alibaba and Yahoo! Japan.

One reason Thompson appealed to the Yahoo! board is that advertising sales and search have become faltering sources of revenue at the portal. The board must have viewed Thompson’s e-commerce background as critical to help Yahoo! build its own e-commerce business. Of course, it does not require an e-commerce executive to be in charge an evolution to a new model at Yahoo! It does require someone who can hire or promote the right people and set a sensible strategy to move Yahoo! in a new direction.

Yahoo!’s board cannot afford to hire an outsider, particularly when it has someone highly qualified in house.

Douglas A. McIntyre