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Wall Street to Yahoo: Name Levinsohn CEO—Now

'Pick the guy that's in the seat already and let's get going.'
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Yahoo’s board has been weighing who should replace Scott Thompson as permanent CEO. Ross Levinsohn—who has served as interim CEO since Thompson’s ouster—and Hulu CEO Jason Kilar are the frontrunners for the post, according to several reports. But investors and analysts see this search as essentially pointless, arguing that Levinsohn should get the nod—and soon.

Update: Kilar has taken himelf out of consideration for the search.

“The difference between Ross and Jason, they’re all cut from the same cloth. They’re ad guys, so pick the guy that’s in the seat already and let’s get going,” said Colin Gillis, director of research and senior technology analyst at brokerage firm BGC Partners. “The problem with Yahoo is every time you have a CEO change you lose a year at best.” Indeed. When Yahoo does decide on a permanent CEO, it will be the company’s fifth since 2007.

While it took four months to find a CEO after firing Carol Bartz last September, there seems to be more urgency this time around. Yahoo’s board is expected to meet next Wednesday, and the company has its annual shareholders meeting the following day. What better time to announce a leader? “Shareholders want the board to decide on Wednesday because uncertainty exacerbates employee turnover,” said Laura Martin, managing director at investment firm Needham & Co. Among board members Levinsohn may already have the edge on Kilar. After naming Levinsohn interim CEO, chairman of the board Fred Amoroso told employees that he should get the permanent gig, according to Bloomberg.

“It’s not like we’re choosing two different strategic directions [between Levinsohn and Kilar]. Both of these men, their strengths and their backgrounds are content,” Martin said. Levinsohn benefits from having been with the company since October 2010, when he joined as evp of the Americas, whereas Kilar would need six months or so to get up to speed and Yahoo could lose a spurned Levinsohn in the process, Martin argued. Compounding matters, that six-month lag could be a blow to Yahoo’s bottom line given the Olympics and election cycle, “two big major advertising tentpole events,” said Gillis.

Buoying Levinsohn’s candidacy is all that he’s accomplished in the less than two months he’s served as interim CEO. Not only has he proved a strategic point of view and the ability to move quickly by securing content distribution deals with CNBC, Spotify and Clear Channel, but he’s also poached a key executive from Google in naming Michael Barrett as chief revenue officer the former CEO of supply-side platform Admeld, which Google acquired late last year. That news was well met by Madison Avenue as well as Wall Street. “That was a great offensive move,” said Gillis. “I haven’t seen an offensive move like that come out of the company in several years.”

Levinsohn is also exploring outsourcing Yahoo’s ad tech stack, including replacing Right Media Exchange with a private marketplace, a move that would even more firmly concentrate the company around a content strategy centered on, in theory, attracting premium ad dollars. And he’s even cleaned up one of Thompson’s biggest messes. On Friday All Things D reported that Yahoo has agreed to settle its patent dispute with Facebook with a deal that could lead to even closer ties between the two biggest competitors to Google’s display advertising juggernaut.

“What we’re trying to tell investors to make investors believe in Yahoo is we’ve got a new board, a new CEO and the rate of pace is picking up, but that story gets hurt if you don’t pick [a replacement quickly],” said Gillis.