Yahoo is on the look out for a new chief executive, with Jerry Yang set to step down from the company and potentially clear the way for a new Microsoft takeover bid.

Yang's objections to a $47.5 billion bid for Yahoo back in May were heavily criticised and the decision looked even worse as the credit crunch bit and the company's share value plummeted.

The CEO will now return to his role as 'Chief Yahoo' which is focused on strategy and technology, but it appears that he has been made the scapegoat for the collapsed deal.

Microsoft

Microsoft has insisted that it will not look to renew any takeover talks in the past, but Yang's resignation could potentially bring a change of heart from the Redmond software giants who are still openly interested in Yahoo's search business.

"From founding this company to guiding its growth into a trusted global brand that is indispensable to millions of people, I have always sought to do what is best for our franchise," Yang said in a statement to staff according to Reuters.

"All of you know that I have always, and will always bleed purple."

Yahoo has also been hit by the failure to come to an agreement with AOL and the collapse of an advertising tie-up with Google.

The resignation triggered a rise in share value – with 4 per cent put on the value of the company following the news.