In my view, there's a big danger for Thompson showing too much swagger without it being clear that he really understands the problems facing the company.
Thompson's defenders might say that Yahoo! could use some swagger as it's been struggling for many years. But recall that's exactly what happened in the first year of Carol Bartz' tenure. The press was very positive on her tough talk. "Finally, an adult is in charge at Yahoo!," seemed to be the underlying tone of articles covering Bartz at the time.
Yet, a couple of short years later, the same press was describing Bartz as more of an out-of-touch buffoon, who "clearly didn't have any consumer Internet background." We never heard any complaints of that before.
Any time an outsider comes in as CEO, part of the reason they are hired in the first place is to see the company with fresh eyes. They are expected to challenge the company's conventional wisdom. They are expected to make bold moves, because the status quo has clearly not led the company to the expected results.However, this rope yielded to the new CEO can become a noose if he/she doesn't have a good sense of the problems and intricacies facing the company. I fear that Thompson's a little too over-confident in his sense of the company for a guy who has only been on the job for a little over two months. If I were him, I'd make sure I do the following in short order: 1. Find a win-win solution with Dan Loeb, bringing him on the board with his representatives and avoiding a distracting proxy battle. 2. Find a win-win solution with Jack Ma. Thompson's dealings with Alibaba on behalf of PayPal by no means prove he knows how to deal with Ma. The bottom line is that every day that goes by, Alibaba's value goes up. That puts pressure on Ma. However, U.S. investors are not giving Yahoo! any credit for the Alibaba stake currently. Thompson should engage with Ma to sell back say a quarter of Yahoo!'s stake in Alibaba in exchange for clarity around the stake and a path to an Alibaba IPO. 3. Get on with the layoffs, but ensure you're cutting fat and not muscle. The cuts should extend to full-time contractors as well as full-time employees, as the true headcount has been underestimated by this trick for some time now. Thompson obviously wanted this job to be CEO and get out from under John Donahoe's shadow at eBay (EBAY). In my view, he still can be a great success at Yahoo! After all, expectations are so low, it won't take much to exceed them. Yet, the biggest danger facing him is himself and overestimating his own prowess and abilities. Find a few smart lieutenants around him at Yahoo! -- whether on the board or the management team -- and shut up and listen more.
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