Struggling internet search giant Yahoo

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[YHOO  Loading...      ()   ] finally made a change at the top and investors are cheering the news.

Terry Semel, the Yahoo chief executive who engineered a remarkable turnaround at the company, but who has presided over a two-year period of non-performance, is out as CEO. He'll continue to work at the company as non-executive chairman and he'll be replaced by Yahoo co-founder Jerry Yang. Former Chief Financial Officer Sue Decker will take over as President.

The dramatic move follows months of vocal frustration, publicly and privately, by Yahoo's top institutional shareholders as well as smaller investors who made their voices heard at the company's annual shareholder meeting just last week. Yahoo shares have been a soar underperformer compared to its much higher profile competitor Google. And all the while, Semel personally pocketed more than $600 million during his 6-year tenure.

The company hosted a conference call this afternoon, featuring Semel, Yang and Decker. Semel opened the call by saying he was "incredibly proud to lead Yahoo these past six years."

"Why now?" Semel asked? "I've long been talking to the board about a smooth succession. I was clear in telling them of my desire to take a step back from an executive role."

Semel's comments indicated that his departure from day-to-day management was his choice, and long in coming. However, at last week's shareholder meeting, when asked by an investor whether he still had the "fire in your belly" to lead the company, Semel gave an emphatic, "Yes."

Today, he conceded that "None of us have been satisfied with the company's recent financial performance."

Yang then addressed callers saying "We are in this for the long haul. The internet is still young," with "tremendous opportunities ahead of us." Yang also said he was "ready to rally" Yahoo's 12,000 employees." He also was clear that Yahoo's board believes the company will remain a vibrant, independent company."

Yahoo has also been under pressure to fill some key roles left open from last December's management shakeup. Decker said today that she is suspending the search for the company's head of audience business. Decker's comments indicate a broader, wholesale management reorganization that promises to re-align the entire upper echelon of Yahoo management.

Yang says the company has "begun the search for the CTO and we'll provide an update on the earnings conference call, referring to another key position at the company also vacant.

At the same time, Decker took the unusual step of updating the company's business outlook. She now sees second quarter revenue within the mid-point to the low-end of the company's current revenue range. That news in and of itself may have been enough for the Board to show Semel the door, especially after last week's shareholder meeting where he kept driving home the point that Yahoo's new search monetization software called "Panama" was performing admirably and that investors would see the fruits of that labor when the company reports earnings the second week of July.

During the call, Yang was asked whether the company considered an outsider to run the company. Semel answered that the search had been going on for some time. Semel said that he personally saw himself "more a coach than a player going forward." Both going outside and going inside were both under discussion, he says. But "the company felt blessed to have both Sue and Jerry" already at Yahoo, "together working as a team."

Earlier on the call, Yang admitted that the company was slow to meet the competition that keeps cropping up in the online world, but that they are now "going to execute with speed and clarity," to invest in innovation and talent. He also said Yahoo continues to be interested in acquisitions if they make sense for the longer term health of the company.

Competition is an ongoing theme at Yahoo, which makes sense when you're going up against Google. I had the opportunity to sit down with Semel in March of last year. He was candid, direct, and thoughtful. But the nagging question of how this company had competed with Google kept coming up.

"Generally, competition has been great for us and we are never going to be the best of everything," Semel told me back then. "But in an overall experience, for our users, I hope we give them the best experience. The thing that really helps us most, to keep us really on the ball, to do a great job, is really competition. When I joined Yahoo, the two competitors in the US were Microsoft and AOL, and they were huge compared to our company. They're still huge, in terms of their parent companies compared to us. We just put our heads down, we just think of our consumers, how do we create the technologies and the ability to provide for our consumers with the better experience? And certainly, over those five years, with a much smaller company, we did a much better job and we grew, particularly in Asia and a lot in Europe as well. So our company has thrived on competition and we are surrounding in everything we do with competitors."

Meantime, investors are left to ponder whether Jerry Yang, the company's enigmatic co-founder, has a personality forceful enough to effect real change. We've seen co-founders return to their wandering companies before to try to get them on track. Steve Jobs was able to do it. The jury's still out on Michael Dell. Can Jerry Yang get the job done.

Yahoo's new chapter begins tomorrow.

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