Investors applauded as Terry Semel resigned as CEO of Yahoo! and handed the reins back to the search giant' co-founder, Jerry Yang.

Semel will remain the company's chairman, but in a non-executive capacity, Yahoo! stated earlier this morning.

Susan Decker was promoted to Yahoo! president, whence she may well leap to the CEO's seat in the future.

Yahoo! shares soared 8% in late trading on news of Semel's resignation, after six years on the job.

Semel took over as CEO in 2001, which was just the start of a rough patch for Internet in general and Yahoo! in particular. Under his watch the company weathered the crisis and achieved growth and profitability, but in the last year Semel has been accused of sleeping on the watch as Google! Forges ahead.

Google went public in August 2004, since which time Yahoo! stock has stagnated, while Google has gained more than 350%.

The development of their share prices reflects the tremendous, and growing, gap in their performances. For the year 2006 Yahoo! achieved revenues of $6.4 billion and netted $751 million. Google reached $10.6 billion in revenues and netted $3.1 billion.

Google's technological growth driver was its search engine, the likes of which no other Internet company has managed to create. Google developed a business driver, namely search-related and text-associated advertising. Yahoo! only recently launched a similar service, Panama, and it's too late to bite off a serious chunk of Google's business.

Under Semel, Yahoo! also lagged after Google in entering the strongest growth market of the last two years: social networks. While Google bought video-sharing website YouTube, Yahoo! did nothing much, settling for images sharing site Flickr and links-sharing site del.iciou.us.

Yahoo! also apparently missed the opportunity to buy the second-biggest social networking site on the web, facebook, which remains privately-held. It has attracted enormous attention for opening its platform to external developers.

Meanwhile, Semel made money hand over fist. He has earned about $450 million since taking the reins in May 2001, partly through salary and partly through stock options. In the year 2006 alone Semel earned nearly $72 million, while Yahoo! shares tumbled 35%.

Yet the turning point for Semel may have been in November 2006, when a senior VP - Brad Garlinghouse - wrote the infamous "peanut butter manifesto", arguing poor strategy by management. Garlinghouse argued that Yahoo! was spreading its resources too thinly over too many activities, like peanut butter on bread. Yahoo! would do better to focus on certain areas, the veep argued.

His memo touched off a tidal wave of discontent and questions about Semel's true aptitude and contribution to the company. Now, six months later, the argument is moot.