Yahoo co-founder, Jerry Yang, who took on the CEO role in June 2007 in an effort to turn the company around, will step down from his role as soon as the board finds a replacement. Under Yang, Yahoo talks for an acquisition by Microsoft Corp broke down; rival Google Inc pulled out of a deal to sell some ads on Yahoo; and the company’s shares have withered amid tough competition and a failing global economy.

In fact, investors continue to be angry with the embattled Internet company as it did not manage either an acquisition by Microsoft - which had offered up to $33 a share - or a deal for Microsoft to take over Yahoo’s search operation, which trails far behind Google.

Ross Sandler, an analyst at RBC Capital Markets opined: “The company is in desperate need of change and this is clearly one way to do it.” Sandler also added that with Yang gone, Microsoft might make another play for the company. He said: “Jerry was the roadblock for the last deal getting done.”

According to observers, Yang’s nearly 16-month tenure as CEO has been a failure, more so as a number of product and organizational initiatives that were dwarfed by the drama of Microsoft’s pursuit of Yahoo. After his stepping down as CEO, Yang will return to his earlier role as Chief Yahoo, and will remain on the company’s board.

Yahoo Chairman, Roy Bostock, will assist the executive search firm, Heidrick & Struggles, in conducting the search for a new CEO, even tough it seems a uphill task to find a competent person willing to come in to run Yahoo at this point, and turn the company’s fortunes around quickly.