MEDIA-I: Online earnings forecast facing new downgrade

Analysts at Merrill Lynch, including the company's internet specialist Henry Blodget, have announced more bad news for the online advertising market, with revenues expected to fall 25 per cent this year. The new forecast came just months after Blodget released a report announcing advertising revenues would remain consistent to 2000 figures at an estimated USdollars 7.9 billion. The analyst had earlier said first quarter revenue expectations would be the "trough" with a sequential reduction of about 10 to 15 per cent from the fourth quarter. Blodget added that the industry could expect "modest sequential increases beginning in the second quarter of this year". The analysts have changed the expectations again by saying that most of the online ad players and publishers still have overly optimistic full-year earning predictions. These, Merrill Lynch added, would most likely be cut in coming months and would include leading internet players in the market. In addition to an expected 20 to 30 per cent growth rate during 2002, Blodget again predicted a fewer number of stronger players, who he said were increasingly using larger ad units.

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