Yahoo co-founder Jerry Yang last night replaced Terry Semel as chief executive.
Mr Semel will take the role of the board's non-executive chairman, and the company named Susan Decker, its former chief financial officer, as president. She will head up the advertising and media business operations.
Mr Yang's return to the head of the company he helped set up 13 years ago also heightened speculation that Yahoo may be poised for more drastic moves.
These could include possible partnerships with rivals or a merger with the likes of Microsoft, Time Warner Inc.'s AOL or News Corp's MySpace, CNBC television reported.
Yahoo also warned that slower growth in display advertising this quarter would offset a better-than-expected performance from its recently upgraded search advertising business.
As a result, it expected second-quarter revenue to land in the lower half of its previously stated outlook which, excluding the cost of payments to advertising partners, was projected in April at between $1.2 billion and $1.3 billion.
Mr Yang (38) co-founded Yahoo in 1994 with fellow Stanford University student David Filo, as a navigational guide in the Web's early days.
Mr Semel was a long-time Hollywood studio executive who took charge of the loss-making company six years ago after the bursting of the technology stock bubble. He is credited with helping focus Yahoo on its advertising and media businesses.
But in recent years he faced heavy criticism for failing to move faster to meet both Google's challenge in web search and advertising and, more recently, the rise of social networking sites such as Myspace and Facebook.