Having failed to reverse Yahoo's stalled growth and plunging profits, Mr. Yang, a Yahoo co-founder, said on Monday that he would give up the chief executive role once a successor is named and revert to being “chief Yahoo,” the strategy position he held before his 18 turbulent months running the company.

But finding the right leader with the right skills to turn around Yahoo will be an ordeal. Executive recruiters say it takes roughly four-to-six months to name a CEO if the board acts quickly. And a new executive typically gives at least a month notice before leaving his or her old employer.

Yahoo has hired Heidrick & Struggles to find possible candidates. Two of the many people being considered at this stage are Tim Armstrong, a senior vice president at Google Inc. and Peter Chernin, president of News Corp., said people familiar with the situation.

Moreover the process for vetting a new executive for Yahoo is made more complicated by the makeup of the 11-member board. A new CEO will need to have a clear direction of where Yahoo is headed in order to effectively turn around the company and please all of the board’s members. "You can't fit the problem to the leader. That's like the tail wagging a dog," Bob Concannon told the CNN, lead tech recruiter for Boyden, which has placed executives for IBM, Apple and Palm. "You need to figure out where you want to go to find the leader to address that. At this level, a CEO is either going to really help the company or further bury it. Yahoo needs to do something because every month it gets less relevant." In order to underline this, it’s worth mentioning the fact that Yahoo shares rose almost 9% Tuesday on news that Jerry Yang would step down from his CEO post, closing at $11.55.

But another element in the yahoo equation is definitely Microsoft and its promise towards the company. Microsoft claimed that it remains "very open" to a deal to acquire Yahoo Inc.'s search business but has "moved on" from past unsuccessful efforts to acquire all of the Internet company, Microsoft CEO Steve Ballmer said. After this statement was made, Yahoo shares hit a 52-week low of $9.24 Yahoo spurned Microsoft's $47.5 billion takeover offer in May. It also later rejected Microsoft's bid to buy only its search engine. But co-founder Jerry Yang, who resisted those overtures, is now stepping down as Yahoo's CEO. In a letter rejecting that offer, Yahoo Chairman Roy Bostock and CEO Jerry Yang argued that the proposal undervalued Yahoo's search business. They wrote that a search advertising pact Yahoo with Google was a better deal for shareholders. Google walked away from that deal earlier this month, as the U.S. Department of Justice said it would sue to block it.

However the company, which is still profitable and expected to pull in $5.4 billion in revenues this year, is in no danger of going out of business. It just needs a wise leader. Yang is not perceived as having that kind of "boldness or decisiveness" that a company competing in today's Web landscape needs, said Andrew Frank, an analyst at Gartner Inc.