"To this day I would say that the best thing for Microsoft to do is to buy Yahoo," he said. And when quizzed on if he would stick to a higher price that he demanded back in May added, "Oh no. At the right price, whatever the price is."

But Microsoft CEO Steve Ballmer didn't bite and said a couple of days later, "We are not interested in going back and re-looking at an acquisition. I don't know why they would be either, frankly. They turned us down at $33 a share."

The move to appoint a new CEO is not surprising, said Greg Sterling, an analyst with Sterling Market Intelligence. “There had been public speculation about this for several months and as they went through several quarterly earnings calls and the condition of the company wasn’t improving, I think there was some sense that you needed new leadership,” he said.

While Sterling credits Yang with some good ideas for turning around the company, “there’s a way in which maybe his personality isn’t well suited for what the company needs, which is maybe a more forceful leader who can restore confidence,” he said.

While the drawn-out attempt by Microsoft to buy Yahoo probably in part led to the announcement about Yang stepping aside, other subsequent factors also likely played a role. “I think it’s not so much a Microsoft thing as it is the demise of the Google deal and a failure to find another alterative to the merger,” Sterling said.