Hold Your Excitement on Yahoo!

It's even too late to breathe a sigh of relief that Panama will finally roll out. That moment came a quarter ago, when Semel swore, with the sweaty earnestness of a deadbeat confronting a bill collector, that Panama would hit the streets in early 2007. All we've heard this quarter is a confirmation that Yahoo! will deliver the goods as promised.

As encouraging as Yahoo! was about its turnaround, it was also sober about how long it will take to show results. In an interview with the New York Times Wednesday, Semel said: "The first time we see any benefit will be at the end of the second quarter. ... Every quarter thereafter we will start to get better."

And as Decker noted, the decline in revenue per query will persist until Panama is "fully operational." Given that even the best-planned technologies suffer glitches and require fine-tuning for a quarter or so, fully operational is something that will happen much later this year. Until then, search revenue could underperform.

That's probably why Yahoo! gave less-than-dazzling guidance despite assurances that the turnaround was on track. Yahoo! said revenue ex-traffic acquisition costs will be between $1.12 billion and $1.23 billion this quarter and between $4.95 billion and $5.45 billion this year. Analysts had been looking for $1.26 billion and $5.47 billion, respectively.

As Larson Kusick observed on RealMoney, several of the most-bullish analysts lowered their earnings estimates for Yahoo! this year following its fourth-quarter report.

There is hope, however, in Yahoo's other revenue generator: display and banner advertising. There, revenue among Yahoo's top 200 U.S. advertisers gained 30% while the dollar-per-display-ad figure also gained. That could offset weak search growth in the near term, but Yahoo! also faces a formidable competitor in Time Warner's Advertising.com.

The good news at Yahoo is good indeed: A long-needed fix is in the works. But the bad news for investors hoping to profit from the turnaround is that they may need to wait several months -- and on the Internet, a lot can change in several months.