Yang's return to the forefront of Yahoo revived speculation that the company may be poised for more drastic changes, including partnerships with media and technology rivals or even a merger. Shares in the company gained as much as 6 percent after the news.

Yahoo said Semel would take the role of non-executive chairman of the company's board. It also named Susan Decker, the company's former chief financial officer, as president.

Yang co-founded the company 13 years ago with fellow Stanford University student David Filo, and remains the public face of Yahoo.

"I am committed to do whatever it takes to transform Yahoo to greater success in the future," Yang said, adding he expected Yahoo to remain a "vibrant independent company."

Semel, a long-time Hollywood studio executive who took charge of the company six years ago in the wake of the bursting of the technology stock bubble, is credited with helping to stabilize the company's advertising and media businesses.

"The past year has been a difficult one for Yahoo. I know that none of us has been satisfied with the results," Semel told investors on a conference call. "I saw myself more as a coach rather than as a player, going forward."

"Yahoo's key Internet advertising business has suffered with economic weakness in some markets and delays in upgrading its search ad system to better compete with Google. The company's share fell about 38 percent last year, but have gained about 10 percent to date in 2007.

Shares of Yahoo were trading up $1 at $29.12 in after-hours trade following the company announcement.

By: DocMemory
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