Shares in internet search engine operator Yahoo surged today amid hopes that a takeover by Microsoft may be back on following last night's resignation of chief executive Jerry Yang.

Yang is standing down after a raft of failures that has wiped
$20 billion (£13.56 billion) off the firm's value. The Yahoo founder returned to run the business in June last year and pledged to win back users and advertisers lost to the dominant Google. But his reign has been seen as a disaster, and shareholders have been calling for him to go.

His biggest mistake was in rejecting a $47.5 billion (£32.2 billion), $31-a-share takeover bid from Microsoft. The shares closed last night at just $10.63 but today rose 14% to $12.63.

Yang's attempt to strike an advertising deal with Google failed, largely on regulatory concerns. In August, he faced down investor anger although a third of votes for his re-election to the board were withheld.

Net sales growth was 3% last quarter, against 14% a year ­earlier. Yang had been betting on the Google deal to boost cashflow by about $450 million.