By Kim Tong-hyung
Staff Reporter
In the hyper-competitive Korean Internet market, Daum Communications has always settled for second best. It remains to be seen whether a change at the management helm would be enough to take the company to new heights.
The operator of the country's second most popular Web portal, Daum (www.daum.net), announced Thursday that it picked its former chief financial officer Choi Sae-hoon to succeed current chief executive Seok Jong-hoon, whose term ends in March.
Daum has been struggling to close the gap on industry kingpin NHN, which controls around 75 percent of the search market through Naver (www.naver.com), the country's most popular Web site, and company officials hope that Choi is the right man to guide the rebuilding process.
Choi, an MBA graduate from the Wharton School of the University of Pennsylvania, joined Daum in 2002 and served as CFO for both Daum and Lycos, an American Internet company Daum acquired in 2004.
The 42-year-old was also the CEO for Daum's car insurance service, Daum Direct (www.ergodaumdirect.co.kr), and was credited with putting the once-troubled business back in the black.
Choi recently served as the chairman of Daum's board of directors, a role that is now saved for the outgoing Seok, granted approval by a shareholders' meeting in March.
``Due to the economic downturn, we believed that we needed a financial expert to weather the tough times and develop new growth models,'' said a Daum official.
``Choi had been highly regarded within the company for his financial intelligence and ability to read the markets.''
A fresh voice at the top was exactly what Daum said it was getting when Seok, a former Chosun Ilbo journalist, was appointed as CEO in September 2007, just a year after sharing the position with Daum founder Lee Jae-woong.
Despite his reputation as an innovative engineer, some in the industry considered Lee a failure as a businessman, who surrendered Daum's early lead in the industry to NHN, which reacted much quicker to the potential of search and online games.
Seok tried to bring the buzz back by providing better platforms for user-generated content and achieved success through online discussion forum, Agora, and the UCC video streaming services.
However, with Agora providing the seedbed for anti-government criticisms under the Lee Myung-bak government, Daum suffered from its strained relationship with policymakers and conservative media.
With the government strengthening its monitoring of the Internet, Daum found itself in an awkward position, with authorities moving to prosecute some anti-government bloggers on Agora over their criticism of the decision to resume U.S. beef imports. The recently arrested Park Dae-sung, more widely known as online economic pundit ``Minerva,'' was also one of the cyberspace celebrities spawned by Agora.
And conservative media outlets, even Seok's former employer, Chosun Ilbo, had been refusing to provide their stories to Daum.
With the possibilities of further regulatory risks looming, Daum's CEO change may also reflect the company's attempt to de-tangle itself out of political controversy.
In a regulatory filing Thursday, Daum reported a fourth-quarter net loss of 2 billion won (about $1.4 million), although posting a full-year net profit of 46.9 billion won for 2008.
Sales rose 11.4 percent on-year to 264.5 billion won last year, with operating profit reaching 38.7 billion won, Daum said.