Overture Investors Fear Fat Lady on AOL Deal

Overture Services

( OVER) investors got some good news and some bad news Wednesday night.

The good news was that, offering a partial answer to a question that has vexed the stock for about a month, Overture said it had extended its partnership agreement with

AOL Time Warner's

(AOL)

America Online. The bad news was that the extension runs only through next Tuesday. The extension is the second for the high-profile deal, which was originally slated to expire in March.

After closing Wednesday at $25.60, Overture shares fell $1.41 in early trading Thursday to $24.19. Overture is scheduled to release its first-quarter results after the markets close on Thursday.

Overture shares have been whipped back and forth over the last month as investors debated the fate of the deal, which the companies haven't commented on beyond saying they're talking. Overture has said it can meet its financial targets even without renewing the AOL deal, but investors worry that if AOL cuts back its affiliation with Overture, other big Internet media firms will do the same, kneecapping earnings and revenue at fast-growing Overture.

After initially ducking the question of whether the deal would be renewed, AOL's Bob Pittman seemingly offered some good tidings on the deal Wednesday evening during AOL Time Warner's first-quarter earnings call. "The success AOL has had in the past is partnering well" and not trying to do everything itself, Pittman said.

Though vague, those words could be taken as a hint that AOL won't develop a pay-per-click advertising system for itself. But in light of Wednesday night's brief extension of the deal, it could also indicate that Overture won't necessarily continue to be AOL's designated partner.