Shares of Yahoo fell to their lowest level in nearly two years in after-hours trading yesterday as it reported weak revenue from Internet search advertising in the second quarter and a delay in a critical project that is meant to increase search revenue.

While Yahoo, which runs the world’s most popular Internet site, has a booming business selling graphical advertising, it has been struggling to rebuild its search service.

Google, which continues to increase its share of both users and advertising revenue, produces 40 percent more revenue from each search than Yahoo does, industry experts say, thanks to software that is better at selecting relevant text advertisements to place on a page of search results.

Terry Semel, Yahoo’s chief executive, told investors in a conference call yesterday afternoon that Project Panama, the company’s effort to match Google’s ad-selection technology, would be delayed by at least three months. Instead of being introduced this quarter, the new advertising system will not be switched on until at least the fourth quarter. The two-year-old project is already many months behind its original schedule.

In an interview, Mr. Semel said the latest delay came after Yahoo’s engineers said the new service needed more time for testing with clients.

“I didn’t want to take it to the market if it was not quite ready and not quite the quality it should be,” he said. “So I said to them, do the best job you can.”

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