Yahoo Inc. finally named its new CEO on Wednesday, hiring PayPal President Scott Thompson in an effort to recharge the flagging Internet company.

Thompson was the head of the online payments firm PayPal, a unit of eBay. As president of eBay's PayPal unit, Thompson is credited for pushing the unit to cater to other online retailers beyond eBay's customers. Under Thompson, PayPal turned into eBay's fastest-growing business with revenue doubling over the past four years and more than 100 million users utilizing the online payment unit. Now he's facing a much bigger challenge at the helm of a company that has seen hardly any growth over the last four years.

Thompson will be tasked with the difficult task of turning around Yahoo's core online advertising business, which is easier said than done. Yahoo has been floundering of late. It has steadily lost business to search giant Google Inc and other sites. According to ComScore Inc., U.S. Internet surfers spent 9.3 percent of their online on Yahoo sites, down from 11 percent two years prior. Yahoo's revenue declined 4.6 percent to $1.07 billion in 2011. Yahoo's shares have also taken a hit with shares falling 3.1 percent to $15.78 at the close of the market yesterday. Shareholders have been impatiently waiting for a turn around. The company has also been leaderless for four months after the company fired former CEO Carol Bartz in September. Bartz and some major shareholders blamed the board of directors for a lack of leadership and direction in steering the company.

Yahoo has embarked on a strategic review since Bartz' dismissal, and there were rumors that Yahoo was going to sell its stakes in its Asian assets, Alibaba Group Holding Ltd. and Yahoo Japan, which are valued at $17 billion. Yahoo has also considered offers for a minority stake from various bidders, including TPG Capital and a group led by private equity firm Silver Lake.

Thompson will have to hit the ground running if he wants to turn Yahoo's fortunes around. To revive Yahoo's revenues, the company has to pursue new services that are innovative and will make Yahoo relevant again. Thompson could look into promising start-ups that the company can build on. Thompson should also assure investors that he is in it for the long haul. He also needs to present a concrete plan of what Yahoo will do in the future. Thompson must also work closely with the board of directors about the company's deal to sell most of Yahoo's holdings in Asia.