Yahoo is poised to name PayPal President Scott Thompson as its chief executive after firing former CEO Carol Bartz in September, website AllThingsD reported, citing sources close to the situation.

Former Web powerhouse Yahoo is undergoing a strategic review as it struggles to compete with newer heavyweights Google and Facebook. It has been run by interim CEO and former Chief Financial Officer Tim Morse since Bartz's departure.

Thompson has been running PayPal, the online payments unit of eBay, since early 2008, and was previously its chief technology officer. PayPal processed $29 billion in payments in the third quarter of 2011.

Yahoo's shares were down about 2 percent in premarket trading Wednesday even though analysts said Thompson is a respected name in Internet circles.

It's probably a slight negative, because it makes the sale of the entire company to someone like Microsoft less likely, said Brett Harriss, an analyst at Gabelli & Co, which owns Yahoo shares. He's certainly a competent manager and he's certainly been successful at PayPal.

Both Yahoo and PayPal declined to comment on the AllThingsD report on Wednesday.

Yahoo recently has been discussing slashing its stakes in China's Alibaba Group and its Japanese affiliate as part of a share deal worth about $17 billion, according to sources familiar with the situation.

Alibaba has also hired a Washington lobbying firm in a sign that the Chinese e-commerce company would be willing to make a bid for all of Yahoo in the event that talks to unwind their Asian partnership fail.

Analysts said one of the first tasks for a new Yahoo CEO would likely be to oversee the sale of its Asian assets.

IF an CEO who's respected in the Internet industry takes control and gives it a unified vision that will be very helpful, said Jordan Rohan, an analyst at Stifel Nicolaus. The sale of the Asian assets is what happens first and what happens afterwards is just a question of how they deploy the cash they get from the sale.

Yahoo, whose services include mail, search, news and photo-sharing, was a Web pioneer that grew rapidly in the 1990s but has been struggling to maintain its relevance and advertising revenue in the face of competition from newer rivals.

In 2008, Yahoo rejected an unsolicited takeover bid from Microsoft worth about $44 billion. Its share price was subsequently hammered during the global financial crisis and its current market value is about $20 billion.

Co-founder Jerry Yang stepped down in late 2008 after being severely criticized by investors for his handling of the bid. The company cut thousands of jobs and later agreed to an advertising and search partnership with Microsoft.

(Reporting by Rachana Khanzode in Bangalore, Georgina Prodhan in London and Yinka Adegoke in New York; Editing by Helen Massy-Beresford and Maureen Bavdek)