Jerry Yang, Yahoo!'s new chief executive, will reject any attempt to take over the search engine group or split it up. His pledge of a robust defence follows the departure of Terry Semel, who stepped aside as the boss last night.

Long-running speculation was ramped up on Wall Street and in Silicon Valley today that Yahoo! could be the target of a bid likely to value the internet group at more than $50 billion.

Plans said to be under consideration include renewed interest from Microsoft, the software giant, which was linked to a possible bid for Yahoo! last month.

There is also speculation that News Corporation is mulling combining MySpace, its social networking site, with Yahoo! in return for a large share in the newly-merged entity. News Corp is the parent company of Times Online.

BACKGROUND

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BACKGROUND

• Yahoo! chief quits after fierce criticism

• Search is history, says Yahoo!

• Microsoft weighs $50bn tilt at Yahoo!

• Microsoft in merger talks with Yahoo!

• Yahoo! eyes $1bn bid for Bebo

How Now Chief Yahoo?

Yahoo founder Jerry Yang is back in charge of the struggling search engine. But the man who calls himself ‘chief’ is returning to a deeply troubled tribe

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Related Links

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Dick Parsons, the chief executive of Time Warner is also said to have voiced early-stage interest in Yahoo!, while telecoms groups including ATT have been mooted as possible partners or buyers.

However, company sources insisted that Yahoo! is determined to remain independent under Mr Yang, the company's technology-savvy co-founder. They added that Mr Yang's was "a permanent appointment", denying widespread speculation that he will take the role on an interim basis to eventually make way for Sue Decker, the well-regarded former finance chief who becomes president.

One Wall Street banker said it was more likely that Yahoo! will enter partnerships with groups that could include Comcast, ATT, AOL, News Corp and Microsoft to boost its dispay - or banner - advertising business, which is flagging and faces renewed competition after Google's recent acquisition of DoubleClick, the largest broker in the sector.

Bankers also refused to discount Yahoo! making a $1 billion-plus bid for Facebook, the social networking site.

Mr Yang's case is likely to be bolstered in coming months by better-than-expected results from Panama, Yahoo!'s new search-based advertising platform, which is charged with countering Google's dominance of the lucrative sector. Large search advertisers have indicated that Panama has increased the "click through" rates and Yahoo! has made upbeat comments.

However, last night Yahoo! added that its overall second-quarter results will be in the bottom half of its earlier guidance range of between $1.2 billion and $1.3 billion, weighed down by a poor display advertising performance, and that the second half results would also be in the lower half of its guidance.

Wall Street analysts also welcomed Mr Yang’s appointment, which followed the resignation of Yahoo!’s chief technology officer at the end of May and a radical company restructuring spearheaded by Mr Semel, whoc becomes non-executive chairman, in December.

“A new vision for the company was needed … and Jerry Yang will add a more technology centric focus for the company,” Robert Peck of Bear Sterns said.

He added that the new president role taken by Miss Decker, previously regarded as a leading candidate for the chief executive role, “consolidates power, which leads to quicker decisions”.

Think Equity Partners said: “We believe that Jerry Yang is a good candidate to fill the roll of CEO, as he has strong technological understanding and vision, and he will be well complemented by Sue Decker's strong strategic and business acumen.”

Meanwhile, technology bloggers cited the resignation of Mr Semel, a Hollywood veteran who made his name at Warner Brothers, as proof that “[Silicon] Valley will take over Hollywood. Not the other way around”.

For more on the bloggers' take click here.

The Valleywag site said: “True, he presided over Yahoo!'s recovery from the last internet downturn. But insiders regarded that as luck, rather than skill. Even when Yahoo! was riding high, other internet execs described him as the Forrest Gump of the industry, someone with a charmed life, but a limited understanding of the new medium to which he'd come, late in his career.”

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