Yahoo co-founder Jerry Yang gestures at a philanthropy party in Beijing in this April 13, 2004 file photo. [Sina.com.cn]

Google's meteoric rise also has decimated the employee morale at Yahoo, leading to a recent wave of executive departures that raised concerns about whether the company would be able to retain the talent it needs to regain its stride.

Just last week, Semel assured shareholders attending Yahoo's annual meeting that he had the fortitude to lead a comeback. He has been counting on recent improvements to Yahoo's online advertising system and a series of key partnerships to boost profits after the company suffered an 11 percent drop in its first-quarter earnings.

In Monday's conference call, Decker said the advertising upgrade, known as Panama, is delivering results that so far have exceeded management's expectations.

Yahoo shares gained 81 cents finish at $28.12 Monday, then surged $1.14, or 4.1 percent, in the extended session.

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