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Thompson, most recently president of eBay Inc.'s (Nasdaq: EBAY) PayPal unit, is taking over the lead role. Yahoo is in dire need of new strategies to increase site traffic and attract advertisers if it hopes to defend against increasing competition from tech giants Google Inc. (Nasdaq: GOOG) and Facebook Inc.
Shareholders were frustrated with the decision, however, since they were pushing for the struggling Yahoo to sell.
"It's probably a slight negative because I think the best outcome for Yahoo would be an all out takeover by Microsoft," Brett Harriss, an analyst at Gabelli & Co., told Bloomberg News. "Hiring a new CEO makes the sale of the whole company unlikely."
Thompson is the company's fourth CEO in five years. Now the pressure's on him to win over shareholders and inspire investor confidence before the share price plunges.