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Jerry YangReuters

Yahoo Inc. co-founder Jerry Yang has quit the Internet company he started in 1995, potentially appeasing shareholders who had blasted the Internet pioneer for impeding efforts to revive the struggling Web company.

Mr. Yang's abrupt departure comes two weeks after Yahoo appointed Scott Thompson its new chief executive officer, and after growing criticism of Mr. Yang and his handling of affairs dating back to an aborted sale to Microsoft Corp. Mr. Yang is leaving the company's board of directors as well as all other positions within the company effective Tuesday, the company said.

Shares of Yahoo gained 3.4 per cent in after-hours trading on Tuesday. Analysts say Mr. Yang's exit might speed discussions surrounding a multibillion-dollar deal to sell much of Yahoo's prize assets – its 40 per cent slice of China's Alibaba, as well as its investment in Yahoo Japan.

"Everyone is going to assume this means a deal is more likely with the Asia counterparts," Macquarie analyst Ben Schacter said. "The perception among shareholders was Jerry was more focused on trying to rebuild Yahoo, than on necessarily on maximizing near-term shareholder value."

"It certainly seems things are coming to a head as far as realizing the value of these assets."

In a letter to Yahoo's chairman of the board, Mr. Yang said he was leaving Yahoo to pursue "other interests outside of Yahoo" and was "enthusiastic" about Mr. Thompson as the choice to helm the company.

Mr. Yang, whose official title is "co-founder and chief Yahoo," is also resigning from the boards of Yahoo Japan and Alibaba Group Holdings.

Respected in the industry as one of the founding figures of the Web, Mr. Yang has come under fire from investors over the years.

In 2008, when Mr. Yang was CEO, Yahoo rejected an unsolicited takeover bid from Microsoft worth about $44-billion (U.S.). Its share price was subsequently pummelled by the global financial crisis and its current market value stands at about $20-billion.

More recently, Mr. Yang and Yahoo chairman Roy Bostock have incurred the wrath of some major Yahoo shareholders for their handling of the "strategic review" the company was pursuing, in which discussions have included the possibility of being sold, taken private or broken up.

"I had thought that Jerry Yang was a lifer at Yahoo," said Susquehanna analyst Herman Leung. "Without him on the board, this could smooth a potential transaction. What that transaction is, is any of our guesses right now."

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