Long time Yahoo! (YHOO) shareholders have a lot to yell about. Yahoo! has been knocked hard by slowing ad sales and overwhelming competition from online titan Google (GOOG) as well as fast growing networking web sites like YouTube and News Corp.'s (NWS) MySpace.com. Yahoo! shareholders have watched their shares' value fall 44% since the end of 2005.

This is unfortunate for existing shareholders, indeed. But for new investors, especially ones with a patient temperament, Yahoo!'s misfortune could spell opportunity. Snapping up the stock while it's down and holding tough until early 2007, new buyers be could be greeted with a pleasant surprise as the company regains its footing over the next couple of quarters.

Investors have been scared off by Yahoo!'s warnings about weak third and fourth quarter results this year, largely the result of a fall-off in ad spending by car-makers and mortgage sellers. Delayed deployment of Panama, a badly needed ad management system that matches advertisements to searches, has soured sentiment for the stock even further.

CEO Terry Semel stated bluntly that he is not satisfied with the current financial performance and intends to improve it. His admission of poor performance signals a new sense of urgency on the part of Yahoo! management that much more needs to be done. Management appears committed to reverse Yahoo!'s fortunes.

Semel says that Panama is back on track and ready for advertisers to use. But most advertisers will hold out until next year. That's when investors might see Yahoo!'s financial performance start to turn around.

Panama's ability to make more money from each search done on its site should boost Yahoo's returns next year. It may also encourage more advertising spending and claw back some of the market share gained by Google, Microsoft's (MSFT) MSN and others in recent quarters. Don't forget, despite its problems, the Yahoo! portal is still the busiest site on the Internet, with more than 100 million users and its search results equal Google's.

Yahoo!'s decision to buy back $3 billion worth of its shares, or nearly ten percent of its market cap, ought to give investors another reason to tuck away a few shares. Sure, a lot is riding on Panama. But if Panama delivers, investing in Yahoo! now could turn out to be a smart move.

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