Henry Blodget Expect Quotations

We continue to believe that the first quarter will be the toughest quarter for online advertising. We expect market growth of only 10 percent year-over-year. We believe growth will then accelerate modestly through the year.

We believe AOL and Time Warner are in the final stages of gaining approval from U.S. and Europe regulatory commissions. We do expect any concessions that would materially impact future performance.

Our preliminary conclusion is that, although Microsoft is not out of the woods, it will be slightly more free to compete on its own terms than we expected it would.

We do not expect significant upside to our estimates. As we have said before, we believe the company is going through an awkward transition from a hyper-growth, revenue momentum story to a long-term growth and earnings story. Despite its growing pains, we continue to believe long-term, patient investors will be rewarded.

The environment continues to worsen versus our expectations, and we continue to think the seasonally weak first quarter will be the toughest quarter in terms of year-over-year growth. We also continue to expect the market to strengthen in the second half of the year, when the impact of the dot.com bubble has worked its way out of the system.

We also believe that some analysts are projecting that the company will miss the low end of the guidance range in Q3 and withdraw its goal of operating profitability in Q4. As a result, if the company hits the mid-point of the guidance range and reaffirms Q4 operating profitability, we would expect the stock to go up.

We expect the challenging environment for online advertising to continue into the second quarter 2001, three-to-six months longer than we had originally expected. Because of this, we are not able to raise our bottom line estimates.