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Yahoo is to roll out the commercial version of its next-generation search advertising portal a month ahead of schedule in an effort to regain ground lost to Google, the world’s biggest internet search group.

The announcement on Tuesday came as Yahoo, which has been struggling to keep up with its arch-rival in the lucrative market for search advertising, reported a better than expected fourth-quarter performance.

Net profits fell 61 per cent to $269m in the period, or 19 cents a share, but were still higher than the 13 cents a share expected by most analysts.

Revenues were $1.7bn in the fourth quarter, an increase of 13 per cent compared with last year. Revenues excluding the cost of acquiring new visitors to Yahoo’s websites were $1.3bn.

Terry Semel, chief executive, said Yahoo had pushed the launch date for its highly anticipated Panama search advertising project up by one month to February 5.

“We expect to see revenue impact of the new system beginning in the second quarter . . . and momentum throughout 2007 and beyond,” he said.

Mr Semel said the company’s existing advertising customers would be transferred to the new platform by the end of the first quarter.

Shares in Yahoo rose more than 6 per cent to $28.66 in early Wall Street trading on Wednesday as news of the Panama launch offset a cautious forecast for the coming quarter. The stock has fallen from a high of $43.21 in January last year.

The amount of advertising revenue Yahoo makes on each search conducted though its network has been falling steadily as the company has waited for Panama, which is meant to do a better job of matching relevant ads to search results.

The low point will come in the present quarter, according to Sue Decker, Yahoo’s chief financial officer, and by the second half of the year revenue per search is projected to be 10 per cent higher than a year before.

Turning to the company’s fourth-quarter performance, Mr Semel said Yahoo had made progress on a “number of strategic goals”, including the monetisation of search results – an area where Google has stolen a march on the one-time internet leader – and the quality of panels, banners and other display ads.

For the full year, Yahoo reported a net profit of $751m on sales of $6.4bn. Looking ahead, the company expects first-quarter revenues of $1.12bn to $1.23bn, excluding acquisition costs.

Copyright The Financial Times Limited 2018. All rights reserved.

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