Terry Semel has ended his six-year run as Yahoo's chief executive officer, and company co-founder Jerry Yang will take over, the company said.
Semel has been the focus of intense criticism in the past two years due to Yahoo's inability to capitalise as much as expected on the fast-growing search advertising market. By contrast, Google has enjoyed eye-popping revenue growth and enviable profits almost exclusively from that market.
Yahoo gets a CEO of the calibre of Steve Jobs and Bill Gates who can match Google's triumvirate of engineers, said Allen Weiner, a Gartner analyst, referring to Google's CEO Eric Schmidt and co-founders and presidents Larry Page and Sergey Brin.
"I always felt that the best CEO for Yahoo already worked there: Jerry Yang," Weiner said. "He is far and away the best choice they could have made."
Last week, at Yahoo's annual shareholder meeting, Semel fielded stinging criticism from shareholders in attendance, leading to tense exchanges at times.
Semel resigned from his position as CEO and chairman and will become non-executive chairman and serve as advisor to the management team.
Semel became chairman and CEO in May 2001.
Previously, Semel spent 24 years at Warner Bros, where he was chairman and co-chief executive officer. Prior to that, he led Walt Disney's Theatrical Distribution division and CBS' Theatrical Distribution division.
Semel was brought in primarily to create a bridge between the Hollywood entertainment industry and Yahoo, which never happened as originally envisioned, Weiner said. "That strategy didn't work," he said.
Because Yang is an engineer who fully understands the internet market and Yahoo's business, Weiner predicts the company troops will rally behind him. "This is a seminal event in the history of Yahoo," Weiner said.