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Whoever takes embattled Yahoo Inc. CEO Jerry Yang’s place will need to pare the former Web sweetheart’s services to effectively compete in a market where it is under siege from Google Inc. and multiple social media players for online advertising, analysts say.

Yang, who yesterday announced that he will step down as Yahoo’s CEO once a replacement is found, had taken multiple unsuccessful steps in recent months to turn around the flagging Internet pioneer. In May, he fended off Microsoft Corp.’s move to buy Yahoo and then failed to consummate a planned search partnership with Google.

Then, after Google backed away from its proposed deal with Yahoo earlier this month, Yang called on Microsoft CEO Steve Ballmer to restart negotiations to buy the company.

Yang is not perceived as having that kind of “boldness or decisiveness” that a company competing in today’s Web landscape needs, said Andrew Frank, an analyst at Gartner Inc. “[Yang’s departure is] a sign that Yahoo needs to really find leadership that can restore confidence in the company. I don’t think they are so much in danger of immediately going under as they are in facing continued erosion of confidence in the company’s leadership and direction.”

The company’s next CEO must convince the market that Yahoo has a sound plan and the decisive leadership to carry it out, he added.

“Yahoo suffers right now from a somewhat fragmented portfolio of service and innovations,” Frank added. “Rationalizing that portfolio with or without some kind of new partner or merger is going to be very important. Yahoo isn’t getting the synergy that it needs out of this combination of stuff that they have.”

David Card, an analyst at JupiterResearch, now part of Forrester Research Inc., added that the new CEO will need to do an inventory check of Yahoo’s assets. Yahoo is finding its traditional Web portal model under siege from Google while multiple upstart social networking players are cutting into its potential advertising revenue, he added. “Yahoo really has not pulled off an answer to those threats,” he noted.

However, Yahoo does have a large, loyal audience base that is increasingly offering up user-generated content that could be used to help its advertisers target the users, Card added. “They have a lot of information about their customer base,” he said. “In theory, you could open those things up to a more socialized approach and/or you can use that information for advertising targeting. It hasn’t been able to convince advertisers that the value is there … to take advantage of that targeting.”