Although Yahoo still ranks as the world's most trafficed website, the firm has been battling a drop in both its market share and overall revenues.

Google meanwhile demonstrated a steady growth in both its revenues and search market share.

Market share data for April 2007 from ComScore lists Google at 67 per cent, trailed by Google at 18.8 per cent and Microsoft at 7.7 per cent. Google over the prior twelve months has consistently grown its grip on the search market, while both Yahoo and MSN slipped.

"The past year has obviously not been an easy one for us," Yang said in a posting to a company blog . "But we’ve taken important steps to address the challenges we face, and we’re starting to realize some of the benefits."

"This is the time for new executive leadership, with different skills and strengths, to step in and drive the company to realize its full potential – it is the right thing to do, and the right time is now," Semel said in a press release.

Yahoo in February unveiled its new Panama advertising management technology. It claimed that the technology would do a better job at matching advertisers with searchers and result in a subsequent revenue boost. The poral in April also acquired Right Media , an online advertising network, which came only weeks after Google's $3.1bn DoubleClick purchase .

Yahoo has yet to report earnings for a quarter during which Panama was fully functional.

Investors welcomed the executive reshuffling. Yahoo stock jumped nearly 5 per cent after the announcement.

Jerry Yang co-created Yahoo as a directory of websites in April 1994 with David Filo. Similar to the Google co-founders, Yang and Filo were PhD students at Stanford University in Silicon Valley when they founded their company.