Yahoo CEO Jerry Yang to step down

Yang took over for Terry Semel, a former Hollywood executive, in June 2007 with promises to revive the company's fortunes. Instead, he is returning to a figurehead executive position after a stormy tenure in which he let two would-be partners slip away -- bungling takeover talks with Microsoft Corp. and failing to land an advertising partnership with Google Inc.

"This whole storybook ending of the founder coming back as CEO hasn't panned out too well," Motley Fool analyst Rick Munarriz said. "Yahoo finally realizes that there is a problem at the company, and it starts at the top."

Yang will return to his former post as "Chief Yahoo." He also will remain on the board, where he will play a key role in the search for his replacement, the company said late Monday.

Yang had been considering stepping down for the last few months, people familiar with the situation said. They said Monday's decision was a joint one he reached with the board of directors.

It's been a painful slide for Yang, whose appointment as CEO had fueled hope among the Sunnyvale, Calif., company's employees and shareholders that he could reenergize Yahoo despite his lack of operational experience. Yang started Yahoo, then a directory of websites, with fellow Stanford University graduate student David Filo and incorporated it in 1995.

Yahoo had for years been outmaneuvered by Google and more nimble Internet rivals, despite its strengths as one of the Web's most visited sites and as one of the largest sellers of online display ads.

But Yang, a respected and well-liked engineer with a solid vision of where the Internet is headed, was too slow to carry out his new strategies and to make tough calls, analysts say. His undoing with investors was the widely held perception that he thwarted the Microsoft takeover.

Yahoo's stock has lost about 60% of its worth on Yang's watch, erasing more than $20 billion of market value. Its shares fell 1.8% to $10.63 on Monday.

Yahoo has hired executive search firm Heidrick & Struggles to evaluate candidates from inside and outside the company.