"Yahoo's next main challenge in 2009 is generating search advertising revenue, especially if advertisers continue to pull back on display ad spending," said IDC analyst Caroline Dangson via e-mail. Not only is search the biggest online ad market segment, but it will remain so over the next five years. "Yahoo has to innovate in search to compete with Google," she said.

Yang did oversee ambitious technical projects to improve services for end users, developers, publishers and advertisers. Some have been delivered, others are in progress, like Yahoo Open Strategy (Y OS), a project to rearchitect the company's sites and services to tap into the popularity of social networking.

With Y OS, Yahoo pledges to open all its sites, online services and Web applications to outside developers, and give users a "social profile" dashboard to unify and manage their Yahoo services. Yet, Li faults Yahoo's leaders for taking too long to articulate that strategy: Y OS was announced in late April.

Meanwhile, Google continues dominating search, and its position continues to strengthen, at the expense of Yahoo and Microsoft.

In the third quarter of 2008, Google nabbed 28.4 percent of all online ad spending in the U.S., up from 25.4 percent in the same period in 2007, according to IDC.