Shares of Yahoo fell as much as 3.6 percent before recovering somewhat, as some analysts said the end of a two-month search for a successor to Co-founder and Chief Executive Jerry Yang would bring some stability to Yahoo.

Yang agreed in November to step down as CEO, capping a tumultuous year during which Yahoo angered many shareholders by rejecting takeover overtures from Microsoft Corp only to see a Web search advertising partnership with Google Inc fall apart under U.S. antitrust scrutiny.

Investors had hoped a new CEO could help revive deal talks with Microsoft, even though the software company has repeatedly said it was not interested in revisiting its $47.5 billion bid for all of Yahoo and remained open to a deal on search only.

"I think the market may be a little bit disappointed that Yahoo's not going with someone who isn't a little bit more savvy when it comes to technology and media," said Todd Greenwald, an analyst at Signal Hill.

Bartz, 60, was chairman, president and CEO of software company Autodesk for 14 years until she stepped down in April 2006. She is still executive chairman of the company.

She has also held executive positions at Sun Microsystems Inc and is on the boards of Cisco Systems Inc and Intel Corp.

The Wall Street Journal, quoting a source familiar with the situation, said Bartz had accepted an offer to become Yahoo's next CEO. Yahoo and Autodesk declined to comment.

Calls to Bartz's home were not returned.

Other names that had been mentioned as possible contenders for the top Yahoo slot were News Corp Chief Operating Officer Peter Chernin and Arun Sarin, former chief executive of Vodafone Group Plc.

BUILDING CONSENSUS

Yahoo has struggled to maintain its hold on the Internet search advertising market against Google, and suffered a dizzying stock slide after rejecting Microsoft's bid.

Yang had faced growing criticism from shareholders, including billionaire investor Carl Icahn.

Bartz is known as a tough and fair leader, and someone who could build consensus among different factions, said Allen Weiner, an analyst at Gartner.

"That's certainly something that Yahoo needs right now. They need that adult leader to bring that order to the company," he said, but added: "She's not a hard-core engineer... She's not what you would call a dot-com or Web insider, but maybe that's not what Yahoo needs right now."

Bill Coleman, CEO of software maker Cassatt, who has known Bartz since 1985, said she was "an extrovert who gets energy out of being involved, being where the action is."

"She has the unique ability to be able to look you in the eye and tell you exactly what you are doing wrong -- how you messed up -- and you leave feeling that she has done you a favor," said Coleman, who worked for Bartz at Sun Microsystems in the 1980s and recruited her to the board of BEA Systems when he was BEA's chief executive.

Bartz's appointment could lead to a fresh offer from Microsoft, said Sandeep Aggrawal, an analyst at Collins Stewart. "I think Yahoo probably needed a CEO who was going to favor this deal," he said.

Yahoo shares closed down 0.98 percent at $12.10 on the Nasdaq stock market.

(Reporting by Anupreeta Das, Robert MacMillan and Gabriel Madway in San Francisco, Yinka Adegoke in New York and Jim Finkle in Boston; Editing by Derek Caney and Gerald E. McCormick)