Yahoo's recently resurgent stock retreated by more than 5% amid fears that a setback in a lucrative partnership with AT&T will undercut the anticipated gains from an overhaul of the Web portal's advertising platform, an Associated Press report said.
The Associated Press report said the sell-off was triggered by an unconfirmed report in The Wall Street Journal that AT&T wants to stop giving Yahoo a slice of the subscriber fees from a 6-year-old co-branding agreement to sell Internet access in most of the country.
If AT&T gets its way, Yahoo would have to be satisfied with whatever money it could make by selling its own online products, such as digital music or matchmaking services, to subscribers of the joint service, the Associated Press report said.
AT&T declined to comment on the substance of the report, but acknowledged in a statement that its Yahoo partnership 'is rooted in the open and ongoing dialogue we maintain,' the report added.
A Yahoo statement included that same language and dismissed The Wall Street Journal report as 'based on rumor and speculation.' It added, however, that the companies were discussing ways to expand their partnership to include AT&T-owned Cingular Wireless, the report said.
Investors drew their own negative conclusions. Yahoo shares fell $1.59, or 5.2%, to close at $29.12 on the Nasdaq Stock Market, the report said.