Jerry Yang

News that Jerry Yang, the Yahoo co-founder and current board member, has resigned sent shares of the internet company he founded 17 years ago up in Tuesday after-hours trading.

The New York Times reports that one of Yang's biggest blunders was to spurn Microsoft's $47 billion offer three years ago. Shareholders were upset with Yang since then, as the company has seen its value drop to less than half that today.

Yang’s departure comes two weeks after Yahoo hired former PayPal president Scott Thompson as CEO of the struggling search and digital media company.

In announcing Thompson as CEO, Yahoo Chairman Roy Bostock indicated that Yahoo’s options include possibly selling off assets.

Yang’s departure could clear the way for Yahoo to sell off some of its internet companies, such as Alibaba or Yahoo Japan, according to The Wall Street Journal.

Last week, Microsoft’s Bing passed Yahoo to move into second place in the market for Internet searches. Google remains the dominant search engine.

The WSJ report has a roundup of analysts reacting to Yang’s departure from the tech company launched when Yang was a graduate student at Stanford University in the mid 1990s.

Microsoft and a consortium of investors recently made a bid to buy a minority stake in Yahoo for up to $3 billion.

In November of 2008, Yang touted a deal to have Microsoft buy Yahoo after Google backed out of its advertising deal with Yahoo. He resigned as CEO in late 2008 after the Microsoft takeover fell apart.

Microsoft's primary motivation to acquire Yahoo was to maintain its online search and advertising deal with Yahoo, which allows Microsoft’s underlying Bing search technology to be used on both sites. The rocky -- yet lucrative -- partnership was struck after Yahoo spurned Microsoft's $47 billion bid for the search giant in 2008.