Yahoo CEO Carol Bartz is out as of tonight and the company's Chief Financial Officer Tim Morse has been named an interim CEO. The struggling portal will kick of a "comprehensive strategic review" of its business in an attempt to turn itself around.

The news of Ms. Bartz's firing was first reported by AllThingsD.com, which today published a critical post on Ms. Bartz's tenure at the company.

"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," Yahoo Chairman Roy Bostock said in a statement.

Yahoo's board also announced a newly formed "executive leadership council" to assist with the review, consisting of General Counsel Michael Callahan, Chief Product Officer Blake Irving, Exec VP-Americas Ross Levinsohn, Senior VP-EMEA Rich Riley, and Senior VP-APAC Rose Tsou.

Ms. Bartz had struggled with several issues since her 2009 hiring, including a few key ones recently. Earlier this year Google passed Yahoo as the largest display ad player, for example, and Facebook is expected to pass both of them this year. That's a major blow to Yahoo, which had long been a leader in display advertising, touting its scale and relationships with major advertisers.

At a time when the online display market is growing faster than search, Yahoo's share of the display pie is declining. Online display is expected to grow 24.5% to $12.33 billion in 2011. Yahoo's share, however, is expected to decline to 13.1% in 2011 from 14.4% a year ago, according to an estimate from eMarketer.

Yahoo has struggled with integrating its search system with Microsoft's Bing in a deal that was struck two years ago. And Yahoo's business outside the U.S. has faced challenges, specifically in Asia where Ms. Bartz clashed with business partner Alibaba CEO Jack Ma.

At the time of her 2009 hiring, the feisty Ms. Bartz was a virtual unknown among advertisers. But in Silicon Valley, where she had previously helmed Autodesk, she was known as a keen operator, one who would bring focus to the company, cut the fat out of slower growing businesses and speed innovation.

Instead, the last several years have been filled with multiple rounds of layoffs and a sense that Yahoo had stalled, both on Madison Avenue, as a series of key sales talents have left, and in its engineering ranks, as it decided to exit the search technology business.

So what should Yahoo seek in its next leader? For starters, someone with a background in Yahoo's key business: advertising.

"The next CEO has to be someone who can articulate a clear value position to Madison Avenue," said Bryan Wiener, CEO of digital agency 360i. "Wall Street will not be happy until advertisers increase their spending which isn't going to happen until they're given a reason to believe."

But the Bartz replacement will also need to be someone with enough technical chops to attract engineering talent and seek new areas of innovation at the company. Yahoo still has massive reach, remains a major player in email and has key mobile projects in the works. But it won't be easy competing with the likes of Facebook, Google and Microsoft for smart tech talent.

In keeping with her direct, abrupt manner, Ms. Bartz fired off a note to her staff tonight -- on her iPad, no less:

To all,

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.

Carol
Sent from my iPad