From: CNet .com —

Yahoo! co-founder Jerry Yang is stepping down as CEO of yahoo.com. The company, which pioneered Internet search, has been in financial turmoil for months.

As CNet.com’s Stephen Shankland reports, “After reporting a 64 percent drop in net income and warning that the advertising market is softening, Yahoo announced a layoff of at least 1,430 by the end of 2008 in October. The cut follows another in which about 1,000 Yahoo employees lost their jobs in February. In after-hours trading Monday, Yahoo! rose 47 cents, or four per cent, to (US)$11.10. … It’s unclear at this stage what changes will come with a new CEO, but one possibility is another shot at a deal with Microsoft.”

Yang rebuffed a takeover bid by Microsoft (MS) earlier this year when it appeared that the company would go under. MS offered (US)$33 per share for Yahoo but Yang held out for more. And MS CEO Steve Ballmer walked away.

In what might have been a shot at MS, Internet Giant and Yahoo! competitor Google opend talks with Yahoo on a co-operative arrangement involving search and advertising. But that deal was never consummated. Last week, after three months of study, Google lawyers concluded that the potential anti-trust hassles associated with the deal outweighed the potential benefits for Google. And walked away.

Upon hearing that the Google deal had fallen through, Yahoo!’s Yang told reporters at a conference he happened to be attending that the company was essentially for sale to the highest bidder — and specifically suggested that ‘now is the time’ for Microsoft to make another offer. MS’s Ballmer said MS was no longer interested in Yahoo! — but Web watchers say MS really does still want Yahoo! and Ballmer was just tweaking Yang for rejecting MS’s first overture. And, now that Yang is leaving, observers say they expect MS to make a new offer for Yahoo! before the end of this year.

Stay tuned…