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Will Yahoo CEO's misstep kill company momentum?

Sharon Gaudin | May 7, 2012
All the momentum and vision that Yahoo CEO Scott Thompson has been building for the struggling company may have been thrown off course.

"A CEO can't be untrustworthy because they are the face of the company and they stand behind the company's financials," Enderle said. "It is common to ask an executive who has misrepresented their credentials to step down. But Yahoo had a great deal of trouble getting him in the first place... It will be very difficult to get someone to replace Thompson who is as qualified, and that may force a less draconian result."

Once a leader in the online world, Yahoo has been overshadowed by players like Google and Facebook. The company has been struggling over the past year or so to regain its top-tier status. With Thompson in Yahoo's top seat, industry analysts largely said he was working to rebuild the company. Now those plans may be in jeopardy.

Thompson launched a major restructuring of the company that included the layoff of 2,000 workers, or 14% of its workforce, in April. The jobs cuts are expected to save the company $375 million.

That's not the only shakeup at the company.

Since Thompson's arrival, Yahoo co-founder Jerry Yang resigned from Yahoo's board and was quickly followed out the door by board chairman Roy Bostock and three other directors.

Brad Shimmin, an analyst with CurrentAnalysis, said the incident may more be embarrassing than devastating to Yahoo.

"I don't think this will ultimately damage Yahoo's ability to regain its relevancy within the marketplace," Shimmin said. "As we've seen with all such crises of corporate faith, so long as the board acts quickly and with authority in resolving issues like this, Yahoo will be able to regain any ground lost."

Thompson, however, may be facing a longer road.

"Unfortunately, his future is not in his hands," said Shimmin. "If he takes ownership and responsibility for the discrepancies, there is no reason he cannot regain trust that has been lost. However, assuming the allegations are true, regardless of his actions, the board may still choose to resolve the issue by making Mr. Thompson go away."



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