Santa Clara, California, Dec. 21 (Bloomberg) -- Yahoo! Inc., the biggest Internet search service, might have to pay to provide Internet access for hundreds of thousands of people now that Spinway Inc. is out of business, an analyst said.
Spinway had provided the infrastructure for free Internet service that was offered by several major retailers who had advertised on Yahoo, Lehman Brothers analyst Holly Becker wrote in a report to clients. Those companies, which include Costco Wholesale Corp. and Barnes & Noble Inc., had provided the Internet service as part of the online marketing and advertising campaigns they had developed in partnership with Yahoo, Becker said.
Spinway ceased operations three weeks ago, Becker wrote. Now, Yahoo may have to pay for the Internet services that some of its advertising clients had offered in partnerships with Yahoo.
``The critical issue now is what happens to the hundreds of thousands of registered users who have signed up for this service,'' Becker wrote in a report to clients. ``At least in the near term, we believe Yahoo may have to foot the bill to keep these customers connected, which could put pressure on earnings.''
Bluelight.com, the Web shopping site started by Kmart Corp., said three weeks ago that it would buy some of Spinway's assets. The purchase will let Bluelight.com continue to provide service for its own 5 million registered Internet users, Becker wrote.
Yahoo shares fell $2.31 to $25.63 today in Nasdaq Stock Market trading. Representatives of the Santa Clara, California- based company couldn't be reached to comment.