Yang's exit opens door for Microsoft

Yahoo! Inc is more likely than ever to be acquired by Microsoft Corp after Yahoo Chief Executive Officer Jerry Yang said he plans to step down, investors said.

"The strategic necessity here is for this company to merge with Microsoft," Larry Haverty, a fund manager at Gamco Investors Inc in Rye, New York, said in a Bloomberg Television interview. The company manages about $24 billion, including Yahoo shares. "This is just unmitigated good news for the Yahoo shareholders."

Yahoo stock rose 4.4 percent on Monday in late trading as investors predicted that a new CEO may broker an acquisition by Microsoft or a combination with another suitor. The company's market value has dropped by more than $20 billion since Yang took over as CEO in June 2007 as discussions with Microsoft ended in failure, an ad partnership with Google Inc was derailed and talks with Time Warner Inc's AOL stalled.