Yahoo Inc. has confirmed that it has fired CEO Carol Bartz and has named Tim Morse, Yahoo's chief financial officer as interim CEO. Several senior Yahoo executives were also named to the newly formed executive leadership council while the company searches for a permanent CEO.

Bartz was informed of the decision by Yahoo's board on Tuesday. The outgoing CEO wrote in a two sentence e-mail to employees that she was fired over the phone by the Chairman of the Board.

"I am very sad to tell you that I've just been fired over the phone by Yahoo's chairman of the board. It has been my pleasure to work with all of you and I wish you only the best going forward," Bartz said in the email.

The situation over the departure remains unclear.

The outspoken Bartz had been brought in to Yahoo as someone who could revitalize the Internet Company. This had not been the case. After her 30 months at the company, Yahoo's key advertising business is struggling, there has been no financial growth and its product innovation cycle has stopped.

Board chairman Roy Bostock has publicly backed Bartz and thanked her for her service to the company during a critical time of transition. He said the board "sees enormous growth opportunities on which Yahoo! can capitalize, and our primary objective is to leverage the Company's leadership and current business assets and platforms to execute against these opportunities."

"We are committed to exploring and evaluating possibilities and opportunities that will put Yahoo! on a trajectory for growth and innovation and deliver value to shareholders," he added.

Yahoo shares jumped 74 cents, or 5.7 per cent, to $US13.65 in after-hours trading.