Net giant Yahoo on Tuesday appointed former Warner Bros. executive Terry Semel as its new chairman and chief executive officer, just a little over a month after Tim Koogle decided to step down from the top spot.
Semel, a 24-year veteran of Warner Brothers, is taking on the CEO role effective May 1. Former CEO Koogle will become vice chairman, a role he is expected to keep until August, after which he will remain on Yahoo’s board. Yahoo President and Chief Operating Officer Jeff Mallett and Chief Financial Officer Susan Decker continue in their current roles and will report to Semel.
The Santa Clara, Calif.-based company also announced that Semel purchased 1 million shares of Yahoo common stock in a private placement transaction.
Those shares aren't what they used to be. Like a number of other Internet companies, Yahoo has seen its stock plunge in the face of a weakened economy and challenges in online advertising.
Last month, Yahoo shook up Wall Street with a revenue warning and news of Koogle’s decision to step down.
In recent weeks, the company has watched a string of top executives leave the company, including its sales head, Anil Singh; its Asian operations chief, Savio Chow; and its European head, Fabiola Aredondo.
Beset by the recent executive vacuum, Yahoo has been busy tapping new blood to round out its upper management team. Earlier this month, the company added three new executives to oversee specific content and programming areas on the Yahoo portal.
Although Yahoo last week posted first-quarter earnings slightly above estimates, it also said it intends to lay off 12 percent of its 3,510 employees in an effort to trim costs, becoming the last of the major Internet companies to tighten its belt with job cuts.
By the third quarter, it expects to begin saving $7 million to $9 million per quarter through the cuts alone. Yahoo said Semel is one of the most respected executives in the media industry. He is noted for his role as chairman and co-chief executive officer at Warner Bros., where he is credited with helping build the company into one of the largest names in music and entertainment.
"Yahoo is a company with incredible potential," Semel said in a statement. "The opportunities for combining traditional marketing and media with the interactivity of the Internet are extraordinary...This is a unique opportunity and challenge that I embrace with great passion."
Wall Street analysts who cover Yahoo expressed reserved optimism about Semel's appointment.
"I think the appointment of Terry Semel confirms the investment thesis that there's going to be leadership there," said Jeffrey Fieler, an equity analyst at Bear Stearns. "I see today as an incremental positive, but don't see it as a defining moment on that path."
Some analysts raised questions about the appointment. Semel has been a powerful figure in managing and producing creative content, such as movies and hit records. But, they wondered, will his skills translate well for Yahoo, which is in desperate need of turning around its advertising business?
"It's a bit of a curious choice," said Jordan Rohan, an equity analyst at Wit SoundView. "I'm willing to keep my mind open about this, but I would have thought a senior cable exec would be a little more logical choice."
Yahoo and Semel need time to prove themselves, he added. "I'm going to wait and see. I think investors should wait and see as well."
Before joining Warner Bros., Semel was president of Walt Disney's Theatrical Distribution division. He sits on the boards of Polo Ralph Lauren, Revlon and the Guggenheim Museum.
The company has been on a search for a new CEO since Koogle's decision to step down and has approached media executives such as former BMG Entertainment CEO Strauss Zelnick to take the reins. Zelnick, however, did not express interest.
Managing Director Jim Citrin said last month that potential candidates included a division president of one of the world's largest media and entertainment companies, a chief e-commerce officer at a top 10 Fortune 500 company, and a chief technology officer from one of the largest global brick-and-mortar consumer products companies.