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AOL Time Warner


was falling 3.3% to $24.67 on Instinet before the bell after Lehman Brothers analyst Holly Becker downgraded the stock to market perform from buy.

Becker said the downgrade reflected lower growth projections for the company's AOL division. The analyst said the market is currently valuing the AOL division at 21 times earnings before interest, taxes, depreciation and amortization, a rich multiple given the challenges facing the business.

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She said the AOL division is facing a slowing narrowband business, a costly broadband transition and online advertising difficulties, while preparing for a European expansion.

Becker now expects the AOL division's EBITDA to fall 0.9% in 2002, down from a prior estimate of 5.2% growth. For 2003, she expects 4% EBITDA growth, well below the previous expectation of 17.2% growth.