Semel quits as Yahoo! CEO

Yahoo! chief executive Terry Semel stepped down on Monday and handed the reins of the struggling search company to co-founder Jerry Yang after six years on the job.

Susan Decker, former chief financial officer and head of the advertiser group, has been named president. Semel, meanwhile, will assume the position of nonexecutive chairman and serve as an adviser to the management team and board of directors.

In a conference call with analysts and media Semel said: "This is the right thing to do for Yahoo! and the right time to do it."

The shakeup comes nearly one week after a somewhat contentious shareholder meeting in which stockholders criticised Semel's pay in light of the company's lacklustre stock price and failure to mount any serious challenge to Google on search and search advertising.

With the personnel changes, the company is undoing some of the reorganisation it initiated six months ago in which it formed three business units: Technology, Audience and Advertising. Now, Decker will oversee Audience, which she previously headed up, as well as Advertising, whose head had not been named. The Technology group, which has been searching for a unit head since the departure of chief technology officer Farzad Nazem several weeks ago, will report to Yang. Co-founder David Filo will oversee the technology organisation until a replacement for Nazem is named.

Semel said in a statement: "The past year has been a difficult one for Yahoo! and none of us has been satisfied with the company's financial performance. As the board and I discussed my future goals and plans I was clear in telling them of my desire to take a step back from an executive role sooner rather than later. We therefore concluded that this is the time for new executive leadership to step in and drive the company to realise its full potential."

Putting to rest any speculation that Yahoo! is a takeover target, Semel said: "The board and I believe Yahoo! is, and can be, a vibrant independent company."

Yahoo! lost its lead in the search market to the younger Google in recent years and watched as Google turned search advertising into a cash cow. Yahoo! has only 27 per cent share of the search market share compared to Google's nearly 50 per cent.

Yahoo!'s stock has dropped about 10 per cent from a year ago, while Google's has jumped about 30 per cent. Yahoo! also took a hit on Wall Street after it reported that first-quarter net profit was down from a year earlier and failed to report any positive effect from its Panama search platform.

However, the latest news sent Yahoo! shares up nearly three per cent in after-hours trade to $28.12.

Elinor Mills writes for CNET News.com