Yahoo!, the internet search engine, yesterday announced an internal restructuring in a move to justify turning down a $33 a share offer from Microsoft last month.

The company said that it planned to reorganise its management and business units which would each report to Susan Decker, the group's president.

By turning down the cash and shares deal which valued Yahoo! at about $47 billion, Jerry Yang, co founder of the company, implied that he believed he was capable of driving the share price to the same level. Yesterday, shares in Yahoo! fell 3per cent to $21.37.

The restructuring is designed to hlp it to compete more effectively against Google, its bigger rival. Yahoo! is trying to grab a bigger piece of the online advertising market which is worth $40 billion and set to double by 2010.

This month, Yahoo! and Google reached an agreement that allows the smaller group to share in Google advertising. Yahoo! expects the deal to generate up to $450 million (£231 million) of cash in the first year.

Previously, Yahoo! and Microsoft reopened, and then abandoned talks after Carl Icahn, the billionaire shareholder activist, threatened to oust the whole board of the internet company unless they started discussing a deal.

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