YANG RELINQUISHES YAHOO POST

The 40-year-old co-founder of the company said he would hold the post until the board names his successor, a process he would participate in. Yang said he would then return to his previous job as “chief Yahoo,” a corporate strategy role, and would remain on the board.

In a memo typed in his typical no-caps style, he wrote, “i strongly believe that having transformed our platform and better aligned costs and revenues, we have a unique window for the right ceo to take ownership over the next wave of mission-critical decisions facing the company.”

The announcement comes a year and a half after Yang assumed control of the company from Terry Semel, a Hollywood studio boss and former Warner Music Group head that he handpicked for the job.

Yang was on the ropes since the high-profile collapse of a $44 billion acquisition offer from Microsoft last spring.

A Yahoo spokesman described the decision as “mutual” and “in progress for a while.”

Yahoo Chairman Roy J. Bostock wrote: “Jerry and the board have had an ongoing dialogue about succession timing, and we all agree that now is the right time to make the transition to a new C.E.O. who can take the company to the next level… We are pleased that he plans to stay actively involved at Yahoo as a key executive and member of the board.”

Yahoo has hired executive search firm Heidrick & Struggles to help look for candidates to replace him.

Shares of Yahoo closed at $10.63 in regular trading Monday, but shot up more than 4% in after-hours trading, with shareholders expressing relief that Yang’s exit might stop the stock’s downward spiral.

Analysts suggested Yang’s departure could re-ignite Microsoft’s interest in the company.

Among the candidates to replace Yang are Yahoo President Susan L. Decker; Daniel L. Rosensweig, the former Yahoo COO who is now a principal at the investment firm Quadrangle Group; and former AOL head Jonathan F. Miller.

After Yang was named to take over Yahoo June 2007, he tried to develop a plan to help the company compete against dominant rival Google. On Oct. 21, Yahoo announced it would lay off at least 10% of its 15,000 employees, with third-quarter net income falling 64%, while lowering its revenue projections for the year.

Last February, Microsoft made an unsolicited bid for the company, but Yang refused to accept its bid of $31 a share, a 62% premium to its then share price of $19.18. He eventually proved willing to sell the company, but at a much higher price than Microsoft was willing to pay. Microsoft took back its offer in May.

Yang then made an advertising deal with Google, which would have generated $250 million to $450 million in additional cash flow in the first year. Under pressure from regulators over antitrust concerns, Google backed out of the deal this month.

Many analysts and investors have suggested that without the deal, Yahoo would be forced to consider either a deal with Microsoft, or a merger with AOL.

“all of you know that i have always, and will always bleed purple,” Yang wrote in the memorandum, a reference to Yahoo’s corporate color.