SAN FRANCISCO -(Dow Jones)- Embattled Yahoo Inc. (YHOO) Chief Executive Jerry Yang has agreed to give up his position, leaving the struggling Internet giant without a clear leader and increasing the possibility an acquirer might seek to buy it.
Yahoo, which earlier this year was the target of a $47.5 billion unsolicited takeover attempt by Microsoft Corp. (MSFT), said Monday it had hired a search firm to look for a successor to Yang, who co-founded the 13-year-old company while he was a graduate student at Stanford University.
Yahoo said it would consider internal and external candidates for the job. Yahoo President Sue Decker is one of the candidates under consideration, a person familiar with the situation said. It was not clear why the company hadn't immediately appointed her as CEO or why Yang's resignation was announced without a successor already chosen.
The new CEO will face a series of difficult challenges, including trying to turn around Yahoo's slumping online advertising business. The new CEO might also be thrust into the difficult position of trying to strike a deal with potential acquirers from a very obvious position of weakness.
"This is a company that could use additional executive experience, but you still have the same strategic issues," said Colin Gillis, managing partner at Click Capital Research.
Reaction to the news, first reported by The Wall Street Journal, was quick. Yahoo shares, which had fallen 1.8% to $10.63 during the regular session, jumped to $11.10 in after-hours trading. Three months ago, Yahoo shares were trading at twice that level.
Yang has been under intense shareholder pressure ever since he rejected Microsoft's offer earlier this year. Calls for his resignation have only increased as Yahoo's business has deteriorated with the slumping economy.
The company, once the leader in Internet advertising, has been losing share in the market for Internet search to Google Inc. (GOOG) and it has been unable to make as much money per search as its larger rival. Yahoo has also been hard hit by the weakening economy because it is more heavily exposed to the slumping online display advertising market.
Yang's dwindling options were recently reduced even further when Google pulled out of a search advertising pact that would have generated hundreds of millions of dollars in additional revenue for Yahoo.
-By Scott Morrison; Dow Jones Newswires; 415-765-6118; scott.morrison@ dowjones.com
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