The board of directors appointed Yang, who co-founded the company 12 years ago, as CEO, and Susan Decker, former executive vice president and head of Advertiser and Publisher Group, as the company's president.
This change is something that the market obviously wanted, according to industry analyst Greg Sterling from Sterling Market Intelligence. When he joined Yahoo, Semel helped bring the company back from the brink, but recently he seemed to have lost the magic touch he had earlier.
"If Yahoo had another lacklustre quarter, the chorus of calls for Semel's resignation would have gotten louder. This might be seen as a pre-emptive move by Semel," Sterling said via email. The question that remains is whether this executive change will have the desired effects, he said.
In a webcast, Semel said he had told the board that he wanted to step back from his executive role "sooner rather than later" and that he and the board agreed this would be a good time for him to step down as CEO.
"I've long been talking to the board about the importance of ensuring a smooth succession to Yahoo's senior leadership," Semel said.
Semel expressed full confidence that Yang and Decker are the right people to carry Yahoo "through its multi-year transformation" while acknowledging that the past year has been a difficult one for Yahoo and that no one in Yahoo's management has been satisfied with the company's performance.
Decker and Yang both said during the webcast that they are confident Yahoo will meet its current revenue forecasts, issued in April, and attain long-term success.
The company's new search advertising platform, Panama, is yielding financial results above expectations, and as such offsetting a slowdown in display advertising, they said.
"I believe Yahoo has all the assets it takes to win and we're well positioned to do that," Yang said.
A major structural reorganisation of the company launched in December under Semel's watch has had the expected results so far, Decker said. It's now easier to make major business decisions, she said, citing as examples the recent closure of Yahoo's under-performing US online auction business and the streamlining of the photo business under the Flickr service and the forthcoming closure of Yahoo Photos.
Another result is the creation of a business unit for the team in charge of Yahoo's home page, which she said has given that team more independence and yielded a better product.
Likewise, the video efforts are being unified and given common objectives, leading to a better user experience and more effective advertising efforts, she said.
Decker, who was the company's chief financial officer for seven years, said she and Yang are confident that Yahoo will be able to address the deceleration in the display advertising business with its acquisition of Right Media, announced in April.
While Yahoo has traditionally been strong in sales of premium display and graphical ads, Right Media will boost its ability to sell non-premium ad inventory via a real-time marketplace that brings together advertisers and publishers, she said.