Yahoo’s top executives have been very focused on their project Panama, but the benefits of it have not quite emerged. The project was intended to be a major reconstruction for the company’s search advertising system. Panama meant to increase revenue and close the growing gap with Internet search leader Google.

The company announced this week that the net income for the first quarter fell 11 percent from a year earlier, while revenue, with the exception of certain payments made to partners, was up 9 percent. Although Yahoo expected these results, they were not prepared for analysts’ negative reaction and disappointed investors that sent Yahoo shares down nearly 8 percent in after-hours trading. Analyst Cantor Fitzgerald discussed the situation.

“There was no tangible proof that Panama is working well or better than expected. There was reference to it, but no concrete evidence in the numbers.”

Yahoo believes the greater benefits of the project will be felt in the second quarter and later this year as the system is launched in overseas markets. Despite the negativity of the investors, Yahoo’s chairman and chief executive Terry Semel said he was pleased with the company’s work.

“The results we put out today were exactly what we expected. To us it is a very strong performance.”

Project Panama wants to make the ads placed alongside search results to be clicked more by users. The advertiser pays only when a user clicks on its ad to visit its site, and the more clicks bring about more revenue. Although investors were hoping to receive the financial benefits now instead of sometime in the future, since the beginning of the year, Yahoos shares have risen about 25 percent, which is far above Google and other major Internet companies. Despite the criticism of other analysts, Douglas Anmuth of Lehman Brothers speaks favorably of the project.

“It is going to be on a schedule that Yahoo suggested and not on what investors had come to expect in the last few months.”

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