Mayer's background in products to help Yahoo
07/17/2012| 08:55am US/Eastern
(Reuters) - Yahoo Inc's appointment of Google Inc veteran Marissa Mayer as its new chief executive surprised analysts, but they hailed the decision saying the Stanford engineer can create a more stable and focused organization.
Mayer, 37, edged out front-runner and acting CEO Ross Levinsohn to become Yahoo's third CEO in a year.
"We believe Mayer's background in product and technology and deep understanding of the Internet could lead to improved results at Yahoo longer-term," ThinkEquity analyst Ronald Josey wrote in a note to clients.
Mayer getting the top job in Yahoo was a surprise as it was seen as a race between Levinsohn and Hulu CEO Jason Kilar.
Levinsohn was focusing on turning the company into an entertainment and information destination that wins back the advertising dollars flowing elsewhere.
But the board may not have endorsed his media-focused, long-term plan to turn the ship around.
Mayer's appointment is a clear message from the board that her background in product is more likely to generate long-term revenue growth than a content focus, Needham & Co analyst Laura Martin said.
Yahoo's last two CEOs -- Scott Thompson from PayPal and Carol Bartz from Autodesk Inc -- also had more expertise in technology on their resume than in content and advertising.
Mayer is potentially a significant hire for Yahoo and investors will be interested in seeing what Mayer can do versus the successive string of CEOs that have recently come and gone at Yahoo, analysts said.
In May, Thompson resigned as CEO after less than six months on the job as a controversy flared up over his academic credentials. Thompson had replaced the controversial and occasionally foul-mouthed Bartz, fired last September after failing to revitalize Yahoo.
"Mayer also brings considerable product experience from Google, a business that has executed much better than Yahoo on this front in the last several years, and where she had a leading role in many important products and initiatives over time," Bernstein Research analyst Carlos Kirjner said.
During her 13-year tenure there, Mayer helped develop Google Search and oversaw some of Google's key products, including Google News and Gmail.
Citi Research analyst Mark Mahaney said he has high regards for Mayer's organizational skills but Yahoo's challenges are substantial.
"Arguably, Yahoo has been mismanaged for more than five years with plenty of blame to go around."
During his tenure, Levinsohn ended a patent dispute with Facebook Inc and signed the social network onto a partnership. He also ended a fractious episode in Yahoo's history by sealing a deal to sell as much as half of its stake in China's Alibaba, netting some $7.1 billion.
"We believe the appointment of a CEO may accelerate important decisions for the company and shareholders, such as a potential deal with Yahoo! Japan and the potential disposal of the ad technology businesses like the Right Media Exchange," Bernstein Research analyst Carlos Kirjner said.
Mayer, who is pregnant with her first child, will assume her role on Tuesday, when the company is scheduled to report its quarterly financial results.
Shares of Yahoo were up 1.6 percent at $15.90 in trading before the bell. The stock closed at $15.64 on Monday.
(Reporting by Supantha Mukherjee in Bangalore; Editing by Joyjeet Das)