June 19 (Bloomberg) -- Yahoo! Inc.'s Jerry Yang, who started the company as a Stanford University student 12 years ago and took the helm as chief executive officer yesterday, said he's gearing up for a long fight with Google Inc.

``I'm ready to dig in and make sure we can take Yahoo to the next level,'' Yang, 38, said in an interview. ``I'm absolutely not interim. We want someone for the long haul.''

Yang replaced Terry Semel after Yahoo lost its lead in Internet advertising to Google and the shares fell 35 percent last year. The new CEO said he will hire engineers and improve the company's technology to regain ground.

His remarks raised concern among investors that Sunnyvale, California-based Yahoo will increase spending when it may not have the resources to slug it out. If Yang stumbles, Yahoo, owner of the second most-popular Internet search engine, may fall further behind.

``They need to identify a technology game plan,'' said Anthony Valencia, an analyst at TCW Group Inc. in Los Angeles, which holds Yahoo shares in its $160 billion under management. ``They're definitely at a financial disadvantage to Google. In a spending contest, Google will win.''

Google had $11.9 billion in cash and marketable securities as of March 31, compared with Yahoo's $3.13 billion. Google shares have gained 33 percent in the past year and closed at $514.31 today. Yahoo dropped 9 percent over that period.

`Exceedingly Attractive'

Yahoo's stock slid 49 cents, or 1.7 percent, to $27.63 at 4 p.m. New York time in trading on the Nasdaq Stock Market.

The departure of Semel and the ascension of Yang increases the chance Yahoo will be sold, according to Jefferies & Co. analyst Youssef Squali, who named Microsoft Corp., Viacom Inc., News Corp. and Comcast Corp. as potential suitors.

``We find Yahoo to be exceedingly attractive for a media or technology player looking to establish leadership online,'' the New York-based analyst wrote in a note to clients today. He rates the shares ``buy.''

Yahoo will focus on generating more money from its Web pages as new sites such as YouTube and Facebook compete for advertisers. While a new Internet advertising program called Project Panama is working better than expected, the company said yesterday net revenue will be toward the middle or low end of its $1.2 billion to $1.3 billion forecast this quarter.

``We have some clear challenges,'' Yang said.

Born in Taiwan and raised in San Jose, about 10 miles south of Yahoo's headquarters, Yang founded Yahoo with David Filo as a Ph.D student in 1995. A year later, they took the company public with CEO Timothy Koogle.

`Strategic Focus'

As traffic on the Web soared, so did advertising revenue, helping Yahoo's stock market value to soar to more than $100 billion. Then the market collapsed. After peaking in January 2000, Yahoo shares lost 97 percent of their value before bottoming in September 2001.

``Yahoo was trying to be a lot of different things to a lot of people,'' said Pat Becker Jr., who helps manage $2.5 billion at Becker Capital Management in Portland, Oregon. The company needs ``a sharpening of the strategic focus,'' he said.

Semel, a Warner Bros. movie executive who knew Yang from an Allen & Co. media conference in Sun Valley, Idaho, replaced Koogle in 2001. While Semel presided over five years of more than 20 percent sales growth, the company lost its lead in Internet ads to Google.

``Yahoo became too Hollywood and not enough Silicon Valley,'' Gartner Invest analyst Mark Stahlman said in an interview. ``The real reason Yahoo fell behind was because they lagged in technology.''

Susan Decker, who started as finance chief in 2000 and was promoted to president yesterday, said a December reorganization let the company make swifter decisions about products, such as closing Yahoo Photos and its online auctions site in the U.S.

Google's Momentum

Google has the momentum. It has twice Yahoo's sales and handled 48 percent of U.S. search queries last quarter, compared with Yahoo's 28 percent, according to researcher ComScore Inc. in Reston, Virginia.

Google's sales reached $3.66 billion in the first quarter, with net income of $1 billion. Yahoo's revenue totaled $1.67 billion, with profit at $142.4 million.

``Jerry Yang is obviously very motivated, he's obviously not stupid,'' said Morris Mark, who oversees $500 million including Yahoo shares at Mark Asset Management in New York. ``Can he run it? Jeez I don't know.''

While Semel's stepping down is a ``positive,'' investors may question why the company didn't look outside for new talent, said Ben Schachter, an analyst UBS AG in New York.

`More Radical Departure'

``The bottom line is that we would have liked to see a more radical departure from the past,'' he wrote in a note yesterday.

Yang, who described Semel as a role model and mentor on a conference call yesterday, became Yahoo's business manager while Filo handled technology. Yang spoke at conferences and took part in earnings calls. In 2005, he helped sign a deal for Yahoo to buy a 40 percent stake in China's Alibaba.com for $1 billion.

That may not be enough experience to run a company of Yahoo's size, investor Valencia said.

``He's obviously more than intimately familiar with the company, but being intimately familiar and having a track record in an executive management position are two different things,'' Valencia said.

To contact the reporter on this story: Jonathan Thaw in San Francisco at jthaw@bloomberg.net; Ari Levy in San Francisco alevy5@bloomberg.net

Last Updated: June 19, 2007 16:12 EDT