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Yahoo has fired its chief executive officer Carol Bartz and named the company’s chief financial officer Tim Morse as interim CEO.

“I am very sad to tell you that I’ve just been fired over the phone by Yahoo’s chairman of the board,” Bartz said in an email reportedly sent to Yahoo employees. “It has been my pleasure to work with all of you and I wish you only the best going forward.”

Bartz’s firing provoked an immediate, gleeful reaction from at least one Yahoo exec.

“Ding dong the witch is dead,” said AOL’s president of applications and commerce Brad Garlinghouse, a former SVP at Yahoo, on Twitter.

Yahoo has been under pressure to improve its performance since Carol Bartz was appointed CEO in 2009, inheriting a company that had slid, over the years, from a web search pioneer to a massive, slow-moving media company that watched its dominance slowly ebb away. Bartz was charged with cleaning house and clearing out layers of middle-management the company had accrued over the years. Granted, that was a tall order — and Bartz failed to deliver on it.

Bartz has a reputation for being a bit of a fireball with a penchant for swearing like a sailor. That may looked like an asset in overhauling a sclerotic company like Yahoo, but it didn’t go over well. Bartz was criticized for mishandling relationships with important partners in Asia and allowing high turnover in Yahoo’s executive ranks.

Yahoo’s move today brings to a close a tumultuous two and a half years of performance that saw the company’s share price rise only around 11 percent. That’s compared to search giant Google, whose share price rose around 74 percent in the same two-and-a-half-year period.

The company has slowly lost market share to Google and Facebook. Yahoo’s share of the U.S. display advertising market is expected to decline to 13.1 percent this year, down from 14.4 percent last year, according to estimates by market research firm eMarketer. Meanwhile, Facebook’s share of U.S. online display ad revenues will grow to 17.7 percent in 2011, up from a 12.2 percent last year, and Google will capture 9.3 percent of U.S. display ad revenues this year, up from 8.6 percent last year.

Yahoo’s share of overall U.S. online ad revenues will decline to a 11 percent this year, down from 13.3 percent a year ago, according to eMarketer estimates. Google’s share is expected to grow to 40.8 percent this year, up from 38.5 percent in 2010 and 34.9 percent in 2009, while Facebook’s share should reach 7 percent this year, up from 4.6 percent last year, according to the firm.

Bartz’s tenure saw very few innovative new projects from Yahoo. The most significant change perhaps was the relatively minor announcement in December, 2010 that Yahoo planned to “sunset” a number of internal projects, including Web 2.0 star and bookmarking service Delicious that it acquired in 2005. Yahoo Picks, AltaVista, Yahoo Buzz and other services were also targeted for shutdown.

Investors were pleased with Bartz’s dismissal, sending Yahoo’s shares up nearly 7 percent in extended trading on Tuesday. That’s nearly as well as the stock did during Bartz’s entire tenure as chief executive.

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