Yahoo exceeded Wall Street\u2019s revenue and earnings expectations in its fourth quarter, as the embattled Web portal begins 2007 with high hopes for its revamped advertising platform and recent reorganization.Yahoo generated revenue of US$1.7 billion for the quarter that\u00a0ended Dec. 31, 2006, a 13 percent increase over the same quarter in 2005, the Sunnyvale, Calif., company said Tuesday.Subtracting the commissions it pays to its advertising partners, Yahoo had revenue of about $1.23 billion, up 15 percent and topping the consensus expectation of $1.22 billion from analysts polled by Thomson Financial.Net income came in at $269 million, or $0.19 per share, including $56 million of stock-based compensation expense, recorded under the fair value method. This compares with net income of $683 million, or $0.46 per share, including $11 million of stock-based compensation expense, recorded under the intrinsic value method, for the same period of 2005. On a pro forma basis, which excludes certain items, net income was $229 million, or $0.16 per share, exceeding analysts\u2019 consensus expectation of $0.13 per share.Yahoo\u2019s management has been criticized internally and externally for a perceived failure to capitalize on the torrid growth of search engine advertising, upon which rival Google has built its empire. The interface of the new Project Panama search advertising system will be available to all U.S. customers by the end of this quarter, continuing a rollout that began in the fourth quarter, Yahoo Chief Executive Officer Terry Semel said during a conference call. Its other major element, a new ad-ranking model, will go live in the United States\u00a0in early February, he said."We are resolute about improving search monetization, and we\u2019re making exciting progress," Semel said.Yahoo expects to begin seeing significant revenue benefits from Project Panama in this year\u2019s second quarter, when it plans to begin rolling it out internationally, starting with Japan, he said.In November, a scathing internal memo calling for a major reorganization of Yahoo became public. Written by a Yahoo senior vice president, the memo said the company has to stop spreading a thin layer of "peanut butter" across multiple opportunities and instead focus on key areas, improve upper-management accountability and reorganize.In December, Semel announced that Yahoo would be reorganized into three new units and that Chief Operating Officer Dan Rosensweig would leave the company. The reorganization is expected to help the company focus its business operations and improve its financial performance. Yahoo missed Wall Street\u2019s revenue expectations in the second and third quarters of 2006.On Tuesday, Semel said he was pleased with the fourth-quarter results, saying the company continues to focus on three areas it has identified as key to its growth: search advertising, mobile and video.For the full year, Yahoo had revenue of $6.43 billion, up 22 percent compared with 2005. Net income was $751 million, or $0.52 per share, including $280 million of stock-based compensation expense, recorded under the fair value method. This compares with net income of about $1.9 billion, or $1.28 per share, including $32 million of stock-based compensation expense, recorded under the intrinsic value method, for 2005.Yahoo expects revenue, minus the partner commissions, to be in the range of $1.12 billion to $1.23 billion this quarter, and in the range of $4.95 billion to $5.45 billion for 2007.-Juan Carlos Perez, IDG News Service (Miami Bureau)Check out our CIO News Alerts and Tech Informer pages for more updated news coverage.