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JP Morgan Cuts Estimates on AOL Time Warner

JP Morgan cut estimates on AOL Time Warner (AOL).

Analyst Paul Noglows says the news that AOL will cut its 2001 guidance is not totally unexpected. He says the anemic ad market was further weakened by the Sept. 11 event. He thinks cable and online subscriptions businesses have performed very well year-to-date, and should continue to do so. Cuts in estimates are coming from the ad market.

Noglows cut $39.1 billion 2001 revenue and $11.B EBITDA estimates to $38.1 billion in revenue and $10.1 billion EBITDA. He also cut the $45 billion 2002 revenue and $13.9 billioin EBITDA estimates to $41B revenue and $11.6 billion EBITDA. He cut his $75 12-month target to $40. Noglows maintains his buy rating. He notes AOL has a strong double-digit cash flow growth, adding that the fact that AOL has just 25% reliance on ad growth vs. 50% for peers should bode well for the company.

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