Net Stocks Return to Renown

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The last time the Internet so captured the popular imagination that Time magazine looked to the industry for its Person of the Year -- Amazon.com(AMZN Quote) CEO Jeff Bezos in 1999 -- the Nasdaq deflated three months later, with overhyped Internet companies leading the way.

So now that Time is back to doting on the Web -- "You" are its Person of the Year, a thinly veiled salute to Internet plays like YouTube and MySpace and sites like Wikipedia among other upstarts -- is this a signal that hype is again reaching a fevered pitch?

This time around, the best-known names in the sector are on more-solid footing, backed by solid earnings and well-worn business models. But 2007 offers almost every major player a moment of truth in the year ahead.

No Internet company has as much riding on the next 12 months as Yahoo!(YHOO Quote), which lost one-third of its value in 2006 but still has a range of precious assets that could potentially reinvigorate the stock.

The Web veteran is scheduled to deliver a badly needed upgrade to its advertising platform -- dubbed Project Panama -- in the first half of the year. Already delayed once, the new technology will help Yahoo! close the gap in the amount of money per search it makes vs. rival Google(GOOG Quote).

"Panama is going to be extremely critical for Yahoo! in the near term and should help put it on a more even footing with Google," says Ryan Jacob, chief investment officer for Jacob Asset Management.