Sector Snap: Internet software, services stocks

Yahoo shares rose $2.28, or 10.7 percent, to $23.63 in afternoon trading on heavy volume.

Yahoo shareholders will decide the fate of the company's nine directors at Yahoo's annual meeting Aug. 1.

Activist investor Carl Icahn said Monday in a letter to investors that he has little doubt that a new board would start negotiations with Microsoft to sell all of Yahoo or its search unit. Icahn also thinks a new board would move "expeditiously" to replace Yahoo head Jerry Yang.

Icahn has been pressing Yahoo shareholders to elect a new board in the wake of Microsoft's May withdrawal of a $47.5 billion bid for the company.

Yahoo responded in a statement that it is still interested in negotiating with Microsoft, but also expressed opposition to a sale of its search business, saying it doesn't think such a deal would be in the best interest of its shareholders.

Google shares added $1.41 to $538.41, while shares of online auctioneer eBay Inc. fell 34 cents to $26.46.

Elsewhere in the sector, shares of VeriSign Inc., which runs some of the Internet's core systems, fell $2.81, or $7.7 percent, to $33.93.

VeriSign said after Thursday's abbreviated trading session that its founder and first chief executive, Jim Bidzos, took over as interim CEO, president and executive chairman. He replaced William A. Roper, who resigned from the company and its board on June 30.

In a client note, Goldman Sachs analyst Sarah Friar said Roper's resignation may indicate the company's plan to divest its noncore operations "is struggling." Friar also noted that other recent executive departures may add "headwinds to the divestiture process" and increase "day-to-day execution risks" for VeriSign.