Following the $47-billion takeover blooper involving Microsoft Corp. earlier this year, Yahoo said Monday that its co-founder and Chief Executive Officer Jerry Yang will step down from his position at the helm of the internet portal.

“Jerry and the Board have had an ongoing dialogue about succession timing, and we all agree that now is the right time to make the transition to a new CEO who can take the company to the next level,” said  Yahoo chairman Roy Bostock said.

However, Yang will stay on the board and will continue as CEO till Yahoo finds a new successor, said the company.

“We are deeply grateful to Jerry for his many contributions as CEO over the past 18 months, and we are pleased that he plans to stay actively involved at Yahoo as a key executive and member of the Board,” added Bostock.

The move comes on the backdrop of a fall out in a proposed deal with Microsoft, a series of rambling attempts to revive the foundering portal''s fortunes and, a failed deal with Internet giant Google marking the last nail in the grave.

The resignation of Yang, 40, who seized the position at the 13-year-old Internet company in June 2007, is projected as a harbinger of fresh talks with Microsoft, which bid $47.5 billion for the company this year.

Shareholders criticized Yang and fellow co-founder David Filo for seeking a higher price while sales growth and profits continued to drop. The stock has lost about 60 percent since Yang took over, erasing more than $20 billion of market value

Yahoo, based in Sunnyvale, California, rose 47 cents, or 4.4 percent, to $11.10 in extended trading after closing at $10.63 on the Nasdaq Stock Market.