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Lehman Cuts AOL Estimates


Lehman Brothers cut its estimates on AOL Time Warner (AOL).

Analyst Holly Becker thinks AOL will have a more sustained downturn in online advertising than most investors currently anticipate. She thinks the risk remains beyond her estimates, that the timing of a potential turnaround will likely come later than projected by company management. Therefore, she cut her estimate for online advertising revenue in 2002 by $147 million to $1.79 billion. For the entire online division, she lowered her 2002 EBITDA estimate by $129 million to $1.79 billion. For 2002, Becker now anticipates total company revenue of $41.9 billion, and EBITDA of $9.6 billion. She notes that her EBITDA adjustments reflect the loss of high-margin legacy deals and the level of investment required to retool the online advertising business. She maintains her market perform rating on the stock.


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