Yahoo! Runs in Place

But Panama was plagued by delays. It was originally slated to be rolled out last summer, but Yahoo! announced that it wouldn't be ready until the first quarter of 2007. Given Google's steady habit of growing market share, while Yahoo!'s stood still or even eroded, the market didn't take that news too well.

But in Tuesday's the conference call, Semel said Panama had been launched that very day. "Starting today, we have begun inviting advertisers in the U.S. to upgrade to the new campaign management application," Semel said. "In fact, we even had our first external customer transition to the platform today as well."

As analysts drilled down, it became clear that the financial impact of the new engine would not be immediate. Asked when the new ranking algorithm would be put to use, Semel acknowledged it would happen next quarter as scheduled, and CFO Susan Decker said "we would not expect a financial impact for at least a quarter after that."

"We would begin to see a financial impact we believe in Q2, and that would build over time as the system and machine learns, and also as we roll out to other international countries later in 2007," Decker said.

Panama! Panam-ah-ah-a!

Between the lines, of course, was the unspoken reality that if it takes you a couple of years to catch up to your chief rival in terms of search technology, your rival has had a couple of years to race that much further ahead of you. Google is famously mum about its own algorithms, but the bulk of its growing corps of engineers has been focused on sharpening its search engine.