Yahoo co-founder Yang stepping down as CEO

Yang, 40, had been pursuing a strategy that he thought would prove Yahoo was worth more than Microsoft was willing to pay, but the rapidly deteriorating economy made a comeback seem increasingly unlikely. As it is, Yahoo's earnings have been eroding for three years, disillusioning investors amid a management exodus that indicated even Yang's own troops were losing faith in him.

After squandering the opportunity to sell to Microsoft, Yang tried to boost Yahoo's profit by forging an advertising partnership with Internet search leader Google Inc.

But that back-up plan fell through two weeks ago when Google walked away from the deal to avoid a court battle with the U.S. Justice Department, which had concluded the partnership would have throttled competition in the online advertising market.

Yang had also been exploring a possible acquisition of another fading Internet star, AOL, but most analysts panned the idea as a desperation move that threatened to hurt Yahoo more than it would help. As Yahoo shares sank, a major acquisition became a moot point anyway because the depressed stock price made it more difficult to finance a deal.

Although Yang's tenure as CEO is unlikely to be remembered fondly by shareholders, his legacy as an Internet visionary remains secure.

Yahoo's remarkable rise began in 1994 when Yang and Filo began compiling a directory of their favorite Web links while working on their engineering doctorates in a trailer at Stanford University. They initially called their Web site "Jerry and David's Guide to the World Wide Web," only to later decide to switch to an acronym for "Yet Another Hierarchical Officious Oracle."

Yang and Filo became two of the Internet's first billionaires not long after Yahoo went public in 1996 with fewer than 50 employees on the payroll. At the height of the dot-com boom, Yahoo's market value stood at $130 billion.

After struggling through the dot-com bust, Yahoo bounced back to become more profitable than ever under Semel. But then Google emerged as the Internet's most powerful company, confronting Yahoo with another set of challenges that bedeviled both Semel and Yang.

Also in msnbc.com business ConsumerMan: The great rebate debate Retailers learn lessons from Black Friday death Your Career: How your name may hurt you Answer Desk: Unemployment benefit madness   Video: Stores are hoping for a holiday miracle

MORE FROM U.S. BUSINESS

U.S. business Section Front

Employers play Dr. Mom to limit flu impact   Pay Czar cuts pay of two top BofA executives AT&T, Verizon face off in TV ads Patented seeds lead to antitrust inquiry Canada court rules for Wal-Mart in union case Newsweek: Google-Microsoft battle hurts consumers AIG, ex-CEO Greenberg settle disputes U.S.-made drywall also being investigated NYT: Medical debt spurs more bankruptcies Washington Post closing several U.S. bureaus U.S. business Section Front   Add U.S. business headlines to your news reader: