Yahoo named PayPal President Scott Thompson as its chief executive, taking over on 9 January from interim CEO Tim Morse, who will resume his role as chief financial officer.
Thompson's appointment comes five months after the firing of former CEO Carol Bartz as former Web powerhouse Yahoo struggles to compete with newer heavyweights Google and Facebook.
Thompson, who will also join Yahoo's board, had run PayPal, the online payments unit of eBay, since early 2008, and was previously its chief technology officer. Under his leadership Yahoo said PayPal increased its user base from 50 million to more than 104 million active users. PayPal processed $29bn (£18.6bn) in payments in the third quarter of 2011.
Yahoo's shares were down nearly three per cent in early trading Wednesday and eBay shares fell more than five per cent as analysts said the online retailer would miss the respected internet executive.
"It's probably a slight negative for Yahoo, because it makes the sale of the entire company to someone like Microsoft less likely," said Brett Harriss, an analyst at Gabelli & Co, which owns Yahoo shares. "He's certainly a competent manager and he's certainly been successful at PayPal."
EBay Chief Executive John Donahoe told staff in an internal memo that Thompson's move was a "shock."
"Scott informed me Tuesday afternoon, saying that despite his passion for PayPal, this was an opportunity he felt he had to take," Donahoe said.
City A.M. Reporter