SAN FRANCISCO/NEW YORK - Yahoo Inc picked Google Inc's Marissa Mayer to become its new CEO, turning to an engineer with established Silicon Valley credentials to turn around the struggling former Internet powerhouse.
Mayer, who edged out front-runner and acting Chief Executive Ross Levinsohn, starts Tuesday as Yahoo's third CEO in a year. She hopes to stem losses to Google and Facebook Inc - which her high-profile predecessors failed to do.
Her hiring signaled the Internet company is likely to renew its focus on Web technology and products rather than beefing up online content. Mayer, who was instrumental in the birth of a major technological innovation - Google's search engine - joins the exceedingly thin ranks of female Silicon Valley CEOs.
Shares of Yahoo, worth less than half their value during its dotcom heyday, gained 2 percent to $15.97 in after-hours trading.
"It's a statement on Yahoo's part to go with a product-centric CEO choice. It's a very big commitment on the board's part to pursue a product-centric strategy," venture capitalist Marc Andreessen told the Fortune industry conference in Aspen, Colorado.
Tech companies can be turned around, he said, citing as an example Apple Inc, which had teetered on the brink of bankruptcy before Steve Jobs returned to the company he co-founded. "It's a big job that Marissa is stepping into," Andreessen said.
Mayer, 37, will assume her role on Tuesday, when the company is scheduled to report its quarterly financial results. On Monday, she tweeted that she was "incredibly excited" to be embarking on her new role.
Mayer, Google's 20th employee and first female engineer, and has led various businesses there, including the design of the company's flagship search engine.
Last responsible for Google's local and location services, she joins fellow women tech-industry corporate chieftains Meg Whitman of Hewlett Packard Co, Virginia Rometty of International Business Machines Corp and Ursula Burns of Xerox Corp.
"A lot of people did not believe that Yahoo could get someone of the caliber of a Marissa Mayer to become the CEO at this stage," said Standard & Poor's equity analyst Scott Kessler.
A YEAR OF TURMOIL
But Mayer's ascension comes as her profile at Google appeared to have diminished in recent months. Shortly after Larry Page took over the helm from Eric Schmidt, she was excluded from a group of top executives reporting directly to the CEO and granted oversight over major strategic decisions.
Her appointment caps a tumultuous year at Yahoo. In May, Thompson resigned as CEO after less than 6 months on the job as a controversy flared up over his academic credentials.
Thompson replaced the controversial and occasionally foul-mouthed Carol Bartz, who was fired in September after failing to revitalize Yahoo.
"She's going to bring in a different perspective. It's pretty clear Yahoo needs a new direction and really a new vision," said Paul Buchheit, a Google engineer who helped create Gmail and now a partner at startup-incubator Y-Combinator.
Yahoo had been widely expected to go with Levinsohn, who in his few months at the helm tried to push a strategy of forging media partnerships to beef up the company's online content.
Sources have said that he was committed to building out Yahoo's own video programming and striking more syndication deals in pursuit of ads that command higher prices.
During his months-long tenure, Levinsohn ended a patent dispute with Facebook and signed the social network onto a strategic partnership. Days after his appointment, he also ended a highly fractious episode in Yahoo's history by sealing a deal to sell as much as half of its stake in China's Alibaba, netting some $7.1 billion.
But the board may not have endorsed his media-focused, long-term plan to turn the ship around.
"I just think it was uninspired," one source said on Monday, referring to Levinsohn's strategy.
A second source close to the situation said that Mayer, who is recognized in Silicon Valley as more focused on technology than content, would try to get Levinsohn to stay with the company. A third source close to Levinsohn said he would wait to see how committed the new CEO was to pursuing a media strategy before making his decision.
"He's 'taking it like a man.' He's not happy but he's also not shocked given how the process had been dragging out," this source told Reuters. "Whether Ross stays or not depends on the chemistry with Mayer and the commitment the company is willing to make to media."
If he chooses to leave, "he won't lack for opportunities," the source said. "A bunch of people reached out prior to this and told him if he the CEO job didn't happen for him they would like to talk."