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Why Scott Thompson Makes Sense for Yahoo!

Updated with confirmation from Yahoo! that Scott Thompson has been named CEO.

SUNNYVALE, Calif. ( TheStreet) -- Yahoo!'s (YHOO - Get Report) appointment of PayPal President Scott Thompson is a smart move.

Thompson's name surfaced unexpectedly this week in a report by the AllThingsD Web site, which cited unnamed sources.

Thompson's appointment makes good sense at a tough time for the Internet giant, which confirmed the appointment shortly before the stock market open.

Thompson has an impressive track record at PayPal, which now accounts for around 50% of eBay's (EBAY) overall revenue. PayPal, which posted its first billion-dollar quarter last year, is expected to contribute $7 billion to eBay's revenue by 2013.

The relatively low profile that Thompson has kept will also work in his favor, particularly when compared to his flamboyant yet often polarizing predecessor, Carol Bartz, who was ousted last year.

PayPal President Scott Thompson has been appointed CEO of Yahoo!

Thompson's technology credentials are also strong. Prior to becoming PayPal's president, he served as the company's vice president and chief technology officer, where he oversaw IT and product development. Earlier in his career, the executive worked for Inovant, a Visa (VISA) subsidiary set up to oversee the company's global technology organization, and was also CIO for Barclays Global Advisers.

Yahoo! needed to quickly appoint a CEO to forge the company's new strategic direction, amid mounting uncertainty about its future. Reuters, for example, reported on Thursday that Chinese e-commerce giant Alibaba has hired a Washington lobbying firm, a sign that it could be willing to make a bid for all of Yahoo! if talks to wind down their Asian partnership fail.

Shares of Yahoo! were down 39 cents, or 2.42%, to $15.89 in early afternoon trading on Wednesday.

-- Written by James Rogers in New York.

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