Yahoo's chief executive Carol Bartz has been fired, ending a rocky tenure in which she tried and failed to revitalise the online giant.

In a statement the company said Bartz had been "removed" from her post and would be replaced by chief financial officer Timothy Morse "effective immediately" on an interim basis as the firm began the search for a new, permanent CEO.

In an email sent to employees from her iPad and titled "Goodbye," Bartz wrote: "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."

The combative chief executive had been under pressure to turn around Yahoo from the day she was appointed. Yahoo remains one of the biggest destinations on the internet but has lost ground with advertisers and audience to Google, Facebook and services like Twitter.

According to research firm eMarketer Facebook is due to overtake Yahoo this year to collect the biggest slice of online display advertising dollars in the US.

Bartz joined Yahoo in January 2009, replacing co-founder Jerry Yang who had returned to the helm of the company. When Bartz joined the firm its shares were trading for about $12 (£7). After news of her departure broke, the shares jumped more than 6% in after-hours trade to $13.72, from a close of $12.91 on the Nasdaq. In January 2000, near the end of the dot-com bubble, Yahoo's shares traded at more than $125 a piece.

Bartz had also fallen out of favour with Wall Street investors, unhappy with her turnaround strategy and her handling of the firm's strained relationship with China's Alibaba Group, in which it holds a 40% stake.

In June Yahoo chairman Roy Bostock gave his public support to Bartz at the company's annual general meeting. "This board is very supportive of Carol and this management team," he said in his opening remarks. "We are confident that Yahoo is headed in the right direction."

Bartz, had previously been chairman of software firm Autodesk. She arrived with a reputation as a tough talker and reinforced it early in her tenure by telling Michael Arrington, founder of the influential Techcrunch website to "fuck off" during a staged interview at an industry event.

Her management style came under fire after the company's apparent mishandling of its relationship with Alibaba. In May it was revealed that Alibaba had handed Alipay – one of Alibaba's crown jewels – to a company controlled by Alibaba founder Jack Ma, apparently without Yahoo's knowledge. Alibaba said Yahoo was fully aware of the transaction and the two sides openly bickered about the deal.

Yahoo is conducting a strategic review of the company's options, including possible divestment of its Asian holdings. It cautioned that no decisions had yet been made.

Bostock said: "On behalf of the entire board, I want to thank Carol for her service to Yahoo during a critical time of transition in the company's history, and against a very challenging macroeconomic backdrop. I would also like to express the board's appreciation to Tim and thank him for accepting this important role. We have great confidence in his abilities and in those of the other executives who have been named to the executive leadership council."

The company said its directors had named five other senior Yahoo executives to an executive leadership council that is intended to help Morse, a former chief financial officer at Altera, a semiconductor makers, and General Electric Plastics, manage the company.