Ever since I was a kid, I've always rooted for the underdog. As a Philadelphia sports fan, you have to be that way or else you will go insane. That's why I've always had a soft spot for Yahoo! (NASDAQ: YHOO).

When others argued that the portal was doomed, I took the contrary position figuring that as more advertising dollars shifted online, the company would get more than its fair share. I figured that Project Panama would make Yahoo's search business at least marginally competitive with Google Inc.'s (NASDAQ: GOOG). Boy, was I wrong. The company's search business continues to suck wind as it loses audience to social networking sites such as MySpace and Facebook. BusinessWeek points out that Yahoo is trying to go back to its geeky roots. While an admirable goal, it may be too little too late.

That thumping sound you just heard was me along with countless others jumping off the Yahoo bandwagon. For the past few months, Yahoo has been sputtering along aimlessly trying to yet again reinvent itself through its 100-day review. Judging from the market's reaction, investors don't have much faith that Jerry Yang and Sue Decker are going to come up with anything groundbreaking. Shares are down $1.01. or 3.6%, to $26.85 ahead of the release of earnings after the close of trading today. They have plunged about 15% over the past six months.

About the only thing that might move the stock is an announcement that it outsourced its search business to Google or that it's considering strategic alternatives including a sale of the company. Yahoo continues to provide good content and knows how to engage users, which would make it a good fit with Microsoft Corp.'s (NASDAQ: MSFT) MSN.

Today's earnings conference call will be lively.

According to the Wall Street Journal, Yahoo! (NASDAQ: YHOO) gave serious consideration to outsourcing its search function to either Microsoft (NASDAQ: MSFT) or Google (NASDAQ: GOOG). The paper writes: "Such a move would likely give Yahoo an immediate revenue bump representing hundreds of millions of dollars annually, because Google, for one, generates about 40% more revenue for each consumer search than Yahoo! ..."

Yahoo! has spent a huge sum on developing its own Panama technology to improve its competitive position with Google, but there is not much evidence that this program has worked well. Another quarter or two of bad results could send Yahoo! back to Google to pick up the additional revenue.

The idea that Yahoo! would turn to a rival for its key search function shows how badly off the company is and how little management may be able to do about it. When Yahoo! decided not to make search a major part of its business, before Google had become a big company, it sealed its fate as a display advertising company, but the display market is no longer growing quickly.

Not matter how much pride Yahoo! would have to part with to set up a partnership with Google for search, it should do so. It needs the revenue and Wall Street needs a revival of the stock.

Douglas A. McIntyre is a partner at 24/7 Wall St.

The investors who are flocking to Yahoo! Inc. (NASDAQ: YHOO) today because Bear Stearns argued that the internet portal would make an attractive acquisition target need to take a deep breath and count to ten because any deal isn't going to happen any time soon.

For one thing, internet advertising is going to take a hit over the next few months because financial services firms are going to cut spending due to the subprime mortgage meltdown. Plus, why would any company buy Yahoo! while questions remain about Project Panama.

Shares of Yahoo!, up about 6% this year, have gotten beaten up badly over the past year, tumbling about 19%. Pundits are predicting gloom and doom for the Sunnyvalle, Calif.-based company, which continues to struggle against Google Inc. (NASDAQ: GOOG) and other web sites such as News Corp.'s (NYSE: NWS) MySpace for advertising dollars.

The news, though, hasn't been all bad. President Susan Decker and other top Yahoo! executives have been buying shares over the past few months. Yahoo's traffic also will benefit as fantasy football season ramps up. Bloomberg News notes the initial public offering of Alibaba.com may boost the company's earnings by 78 cents per share.

Those are more compelling reasons to buy Yahoo. Remember, a potential buyout is like a potential weight loss. The gap between theory and reality can be huge.

After covering Yahoo!'s Q2 results yesterday, I was left a little disappointed. True, current CEO and company co-founder Jerry Yang has only been in the top spot for a month or so and the April-June quarter results obviously did not reflect any of Yang's direct effort to turn the company around. Yang still aims to monetize more of the traffic Yahoo! receives as well as find new ways to break into non-traditional advertising areas to increase growth, much like competitor Google has done. Listening to Yahoo! President Sue Decker, I believe she has a firmer grip on the operational logistics than Yang, although Yang seems to be more of a spiritual leader for the company. I was left wondering if this new management combination will work.

Were Yahoo!'s (NASDAQ: YHOO) Q2 results a problem? Not necessarily, although that is the sentiment right now with the stock being hammered about 5% in premarket trading right now. The company matched analyst expectations of $0.11 EPS, but offered very little in guidance for future quarters and said that some of the revenue shift that was expected for the Q3 and Q4 period actually occurred in Q2. In other words, don't expect any stellar quarters this year at all from Yahoo!, even with its Project Panama "making great progress." Hmm.

When Google Inc. (NASDAQ: GOOG) releases its quarterly numbers tomorrow, it will blow past analyst expectations if recent history is any sign. This will, again, pressure Yahoo! management team to show that it can be as innovative and make as much cash (from any combination of areas) as its larger competitor, using internet search or anything else. In fact, Yahoo!'s position to see revenues from just as many areas as it can is increasingly important as it won't be taking search market share away from Google any time soon. The question is, can it do it?

In what will probably be a so-so quarter and just over a month after major executive changes, Yahoo! Inc. (NASDAQ: YHOO) is set to release its second quarter earnings tomorrow after the market closes. Earnings per share are expected by industry consensus average to be at $0.11 for the quarter, which would be identical to the year-ago quarter.

Will Yahoo! meet analyst expectations tomorrow afternoon? From most respects, this will be determined by how successful the newer Project Panama keyword bidding system has shaped up to be. This new system, which mimics Google Inc.'s (NASDAQ: GOOG) enormously successful approach, was late to Yahoo! and it remains to be seen if it can significantly boost revenues for the company. This is no easy feat, and although Yahoo! is profitable, it just isn't profitable enough -- especially when compared to Google -- and its lack of focus and vision was a prime reason for the management shakeup.

Yahoo! will survive, although it is doubtful that it will be able to take significant internet search market share from global leader Google. Yes, many companies like Yahoo! and Microsoft Corp. (NASDAQ: MSFT) are making handsome profits from internet-based advertising, but Google has the market cornered for search advertising for now. The analyst Q&A at tomorrow's webcast/conference call should be interesting to say the least. Check back here at that time, as I'll be live-blogging Yahoo!'s Q2 call right here at BloggingStocks.

Yahoo Inc (NASDAQ: YHOO) shareholders sent a symbolic message yesterday about the heft of Chief Executive Terry Semel's $71.7 million paycheck, which was more than double that of any other Silicon Valley CEO last year, according to the San Jose Mercury News.

Three top advisory firms have been urging institutional shareholders to vote against three members of Yahoo's compensation committee, one-third of the investors voted against the slate of directors at the annual meeting, up significantly from 2005, when nearly one-fifth of the investors withheld their votes for directors after a similar campaign.

About one-third of investors also backed a union pension fund's proposal to tie pay more closely to performance.

Reacting in part to shareholder discontent, Yahoo's board approved a controversial package in May 2006 that slashed Semel's salary from $600,000 to $1 but awarded him 6 million options to carry him through a three-year period. Those options were valued at more than $71 million.

Semel has cashed in a total of $446 million in gains since taking charge in 2001. During this time, Google Inc (NASDAQ: GOOG) has come to dominate many aspects of Internet searching and advertising.

Meanwhile, investors continue to look for any signs of success from Project Panama.

In one of the first public attempts by Google Inc. (NASDAQ: GOOG) to give customers incredibly customized information, the web search leader is poised to build the strongest database yet of detailed human behavior. How does it do this? By storing web searches (and for news, video, etc.) and preferences for its customers. Then, it will take that information to build a model of each Google customer and use that expansive material to give customers advice on making important decisions about their own lives.

Google CEO Eric Schmidt was heard saying, "The goal is to enable Google users to ask questions such as 'What shall I do tomorrow?' and 'What job shall I take?'" -- and that says it all. Google's aim is to be the first artificially intelligent and global network that "knows" about its customers from every angle and can suggest things to them on a personal and custom scale. Is Google becoming the Skynet of the Terminator films? Hardly, but the goal of the company is to enable the most relevant information and render it when needed. Right now, that realm sits squarely in web search, but is expanding rapidly.

Google has already showed (profitably, I might add) that if it can engage the customer in a non-intrusive way and suggest things (advertisements) that fit the customer, then the customer will respond ... and respond ... and respond. Will customers care that Google has so much personal information on their online habits? If it helps those customers be more productive and eases the load on life because of an "information-available-anywhere" type of approach, perhaps not.

Yahoo Inc. (NASDAQ:YHOO) shares have outperformed Google Inc. (NASDAQ:GOOG) so far this year and I couldn't care less.

For one thing, it's only March. The fact that Yahoo is up 19 percent and Google is down 5 percent tells us more about market expectations than the companies.

Yahoo is currently trading at a forward price-to-earnings multiple of 42. Google is trading at a multiple of 24. Analysts are expecting Google's revenue to rise 63 percent in the current quarter to Yahoo's 11 percent., according to Thomson Financial. That doesn't matter much since analysts usually underestimate Google's earnings.

Google's stock has been held back by general unease about the economy, worries about Google's growth rate slowing from double warp speed to warp speed and concerns about competition from Microsoft Corp. (NASDAQ:MSFT) . Moreover, Wall Street also has heard so many great things from the company that now it will only bid up the stock for extraordinarily great news.

The sentiment around Yahoo is more complicated.

Wall Street falls in and out of love with Yahoo about every six months or so. The media makes it sound like Google will drive it out of business tomorrow. While I am not attempting to minimize the threat the search engine giant poses, it's important to remember that Yahoo can still deliver huge audiences for advertisers.

Project Panama will improve Yahoo's search business, but the company will still be under siege from specialty sites and YouTube. It continues to benefit from the shift of display advertising onto the Web. Even though it's a distant second to Google in search, it's still attracts plenty of users. Advertisers also don't like to spend all of their money in one spot even Google.

Remember that investors will turn on both stocks at the slightest sign of trouble.

Buying Yahoo Inc's (NASDAQ: YHOO) stock is a bet on Project Panama, its new advertising platform. If it succeeds, the stock goes up. If it fails, Yahoo CEO Terry Semel gets fired and the stock goes up. Therefore, investors are almost in a win-win situation.

In addition, I'd say that the downside risk is protected by the powerful cash flow machine that this company is. For 2006, Yahoo generated revenue of $6.4 billion, EBITDA of $1.9 billion and free cash flow of $1.27 billion. Any way you look at it, Yahoo's cash generating ability is not going away over night.

For the stock to take off, Project Panama needs to be able to better dynamically link search with advertisers, thereby driving growth again. However, investors will not see this growth until 2Q07. Yahoo stated that 1Q07 will be a transition period.

Waiting for Project Panama to show positive results could prove to be a big risk. If the new advertising platform takes hold the stock might have already discounted the success, making it too late to profit. With little downside risk, I might consider purchasing Yahoo and putting it away. If the new advertising platform begins to work, this stock will quickly come back into favor.

Yahoo Inc. (Nasdaq:YHOO) investors are eagerly awaiting the Project Panama upgrade to its search advertising system. They should also expect the complaints that will follow.

The Wall Street Journal (subscription required) outlines the problems some advertisers have had with the new system Yahoo is developing. While they are no doubt annoying, they aren't surprising.

Project Panama is a very complicated undertaking that Yahoo will fine tune through trial and error. It's also a huge change for advertisers. Problems are bound to happen. Savvy advertisers understand this and will give Yahoo a chance to straighten them out.

Their patience, though, has its limits. Unhappy advertisers can shift their money to Google Inc. (Nasdaq:Goog) and other competitors. Yahoo's search audience, though smaller than Google's, still is too large for advertisers to ignore completely.

Investors have every right to hold CEO Terry Semel accountable for Project Panama. They will no doubt want to hear the company report solid progress during today's fourth-quarter earnings report. Any slipups will not be viewed kindly.

Remember last year when Google, Inc. (NASDAQ:GOOG) Chief Financial Officer George Reyes spooked Wall Street with talk about slowing growth? Google's shares plunged as panic set in and people wondered if the good times were over. Bullish analysts defended Google as if they were lawyers plea bargaining for a client. Eventually, all was forgiven and Google got back into Wall Street's good graces.

What gets lost in all of the Google hoopla is the fact that Reyes was right. Google's growth is slowing, even though it's still very robust. Revenue on a year-over-year basis jumped 79 percent, 77 percent, and 70 percent in the first three quarters of 2006 respectively. Will that trend continue?

Analysts are expecting the company to report revenue of $2.18 billion, an increase of about 14 percent from $1.92 billion a year earlier, when it issues fourth quarter results on January 31. These figures include traffic acquisition costs. Profit is expected to be $2.90, according to Thomson Financial. Growth is still remarkable even if it's less gravity-defying than it had been.

Now keep in mind that Wall Street analysts have a really poor track record in forecasting Google's earnings because the company gives them no guidance or much other information. Since the result of this usually has been "upside surprises," no one has complained.

Bill Miller, one of the world's greatest money managers, had his worst year in over a decade. His investments in eBay Inc. (NASDAQ:EBAY), Amazon.com Inc. (NASDAQ:AMZN), and Yahoo! Inc. (NASDAQ:YHOO) killed his performance in 2006. But, he justified his Yahoo! holdings by saying the stock could go from its current $26 to $40 next year. Maybe his grief over losing all that money has clouded his judgment.

Miller thinks that Yahoo!'s new search technology for advertisers, the so called Panama Project, will drive both the company's earnings and its stock price. He has not made it clear why he thinks any advertisers would switch from Google Inc. (NASDAQ:GOOG), which has almost the entire market and a product that works remarkably well.

It is also worth noting that in the November comScore numbers on Internet audience, News Corp.'s (NYSE:NWS) Fox Interactive passed Yahoo! to move into first place for total pageviews. (Fox Interactive pageviews include MySpace of course.) Yahoo! shareholders cannot be too happy about that. Google also made big strides forward as seen in the study.

Maybe Yahoo! should sell Panama back to the Panamanians.

Douglas A. McIntyre is a partner at 24/7 Wall St.

For those who were concerned when Yahoo! Inc. (NASDAQ: YHOO) missed its date for the new Panama search and advertising platform, forget about it.

Several companies, most notably InterActiveCorp's (NASDAQ: IACI) Ask.com, say that their search technology is better than Google's, yet only get a few market share points in the search market when the numbers come out each month. At most.

Panama my be good, but Google Inc. (NASDAQ: GOOG) is good enough. Internet users who use search have given Google about 50% of the market, leaving Yahoo! and Microsoft's Corp (NASDAQ: MSFT) MSN as distant No.2 and No.3.

Habits are hard to change. Even if Yahoo! Panama delivers slightly better results for advertisers and searchers, there will be no whole scale migration to the product. Among other things, Wall St. and the business press have left Yahoo! for dead. Techies don't like to do business with companies that are warding off buzzards. Bad public image may not equate with bad technology, but it's close.

Just like Yahoo! is trying to get back into search, Google has tried to get into the online payment business. The company undoubtedly put a lot of money and R&D into Google Checkout and priced it to compete with the dominant eBay Inc. (NASDAQ: EBAY) PayPal system. But the PayPal lead appears to be too great even for Google to crack. Time will tell, but there does not appear to be a migration away from the eBay online payment system.

Even if Panama had hit its May launch date, it is questionable it would have made a difference for Yahoo! in its competition with Google. Coming even later to the game is not likely to help Yahoo! at all.

Douglas McIntyre is a partner at 24/7 Wall.

Okay, so the Yahoo!-Facebook talks got "bogged down." Again. Only in July the two companies came close to a deal, but then not only did Yahoo! Inc. (NASDAQ:YHOO) 's stock got slammed (because of delays in the new search advertising platform, Project Panama), but also a new set of numbers indicated that Facebook wasn't growing at the desirable, previously assumed pace.

If not Facebook, then something else. What is Yahoo! doing? What action, if any, is it taking?

I'm not saying that Yahoo! should rush into a deal it isn't comfortable with, but I am saying Yahoo! should do something, anything; either improve internally or bring outside help and growth through a good deal. Yahoo! needs to act. Now. It needs to show shareholders it is still a moving, happening company. Breathing would be good too.

I've complained about Yahoo!'s lack of action before, just prior to Yahoo!'s warning regarding Q3 results. Yes, I know I've also hailed Yahoo!'s patience for not running blindly into deals -- I still believe the reaction to the same Google-YouTube deal would have been different had Yahoo! been the buyer -- but patience is one thing and lethargy is another.

I remember shaking my head sadly when on the day that Google Inc. (NASDAQ: GOOG) announced it is buying YouTube, Yahoo! Inc. (NASDAQ: YHOO) announced the launch of its Time Capsule project. Hey, I'm just as geeky as the next person, probably even more, but the contrast was almost pathetic.

Okay, it's the fourth quarter and investors are anticipating, nay, demanding, to see results. Project Panama has been delayed and the official release date is now. That is, the fourth quarter.

It seems that something is moving, or at least stirring now. Finally. Customers of Yahoo! Search Marketing received an email just a few days ago regarding the new advertising platform. Yes, yes -- regarding Panama.

Not to get too excited, the email just went over the new terminology that will be used once the new platform is in place. But what it means is that indeed, there are plans to roll out the new platform in the near future. And not a moment too soon.

Yahoo! Inc. (NASDAQ: YHOO) shares have been hit badly recently, especially since management announced that ad revenue hasn't been showing the promised growth rate due specifically to softness in autos and financial services advertising revenue. As a result, Yahoo!'s earnings will likely be in the bottom half of its guidance for Q3. Investors are hoping Panama would put Yahoo! back on track to accelerated advertising revenue growth and that the growth would appear in earnings results as early as 2007.

Project Panama is on its way, any day now. You'll see.