Yahoo CEO Carol Bartz fired over the phone.

Yahoo CEO Carol Bartz has been fired from her position after the ailing internet company lost further ground to main rival Google.

Carol Bartz, 63, who was fired over the phone, has had a rocky tenure lasting nearly three years punctuated by stagnating growth and a bitter row with one of the Yahoo‘s Chinese partners.

Carol Bartz, who was hired despite a lack of internet or advertising experience, told her former employees that she was fired by Yahoo’s chairman of the board, Roy Bostock.

Recently, Yahoo has settled a payment dispute with China’s Alibaba Group, in which the internet company holds a 40% stake.

Carol Bartz, the fired CEO, has also had to watch as Yahoo loses further ground as an internet domain to all-conquering Google, while also facing strong competition from other social networks like Facebook.

Yahoo ex-CEO announced her departure to employees via a two-sentence email from her iPad which read:

“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.”

Yahoo has appointed chief financial officer Timothy Morse as CEO on an interim basis, but plans to search for a permanent replacement for Carol Bartz.

In 2000, Yahoo shares achieved its peak , being traded for $125, but on Tuesday they closed at $12.91.

Yahoo lost further ground in the race against Google during Carol Bartz’s tenure, despite actually making more money through layoffs, service closures and other cost-cutting moves.

In 2010, Yahoo’s revenue edged up by just 2% in the first nine months of the year, while Google’s climbed by 23% in the same period.

In April 2010, Carol Bartz candidly admitted that she “could have done better” in her job, by which time speculation around her position was already growing.

Facebook has also become another serious competitor for Yahoo by attracting the major marketing partners which once went to Yahoo during its boom in 2000.

Yahoo was forced to fire more than 600 staff – around 5% of its workforce – in 2010 due to lacklustre growth.

Yahoo shares jumped 74 cents (5.7%) to $13.65 in after-hours trading, around 12% higher than they were when Carol Bartz was named chief executive.

In the last months speculation has mounted over various companies wanting to either take over Yahoo or invest and split into parts.

News Corp, AT&T and Verizon had all been linked with a move to buy the company out, with Yahoo’s cooperation.

Carol Bartz had joined Yahoo as the firm’s Chief Executive Officer after 17 years at design software company Autodesk.

Roy Bostock, chairman of the Yahoo board, had publicly backed Carol Bartz earlier this year, but has since decided to let her go after the company posted more disappointing financial results.

Roy Bostock 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 have talented teams and tremendous resources behind them and intend to return the Company to a path of robust growth and industry-leading innovation.”

Roy Bostock also thanked Carol Bartz for her service to Yahoo during “a critical time of transition in the company’s history, and against a very challenging macro-economic backdrop”.

Timothy Morse, the newly appointed interim CEO said:

“It is an honor to be selected for this role and lead the Company with this world-class team of executives.

“I look forward to working with the Executive Leadership Council and the talented employees of Yahoo!, and to partnering with the Board to invest in the organization and continue to drive its ongoing growth plans.”