Controversial investor Carl Icahn has resigned from the Yahoo board with immediate effect.
Yahoo does not need an activist director at this time, Icahn said in his letter of resignation, according to Reuters.
Icahn, who joined the Yahoo board following Microsoft's unsuccessful bid to acquire the company for $47.5bn in 2008, continued to push for a deal between the two to boost share value.
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A search partnership was finally announced in July that will see Yahoo use Microsoft's back-end search technology on its Web portal.
Yahoo has said the deal with Microsoft, which is awaiting regulatory approval, will allow it to save $425m in operating expenses.
The partnership was negotiated by Yahoo CEO Carol Bartz, the successor of Jerry Yang, who rejected Microsoft's initial offer.
Icahn said the Microsoft partnership will provide great long-term benefits to Yahoo and he commended Bartz her role in setting up the deal.
Yahoo said in a statement there are no immediate plans to find a replacement for Icahn, and that the board will operate with 11 directors for the time being.
Icahn's resignation signals he believes Yahoo is back on track, but US financial magazine, Barron's has suggested Yahoo investors should switch to Google.
Yahoo's advertising revenues are on the decline while Google's are rising and its cost to acquire new subscribers is falling, said Barron's.
Google's market share for Web search also grew in September while Yahoo's did not, according to Barron's, which said Yahoo's results are only "less bad" despite cutting expenses to the bone.