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Blodget Cuts First-Half View on Yahoo!, Raises Second-Half Estimate

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Merrill Lynch

analyst Henry Blodget cut his first and second-quarter revenue and earnings outlook on



, citing the slowing online advertising market.

However, he raised his forecast for the Internet company's third and fourth quarter, saying that "growth will then accelerate modestly through the year."

In his report, Blodget said he believes the first quarter "will be the toughest quarter for online advertising," and cut his earnings estimate to 11 cents from 13 cents a share for Yahoo's first quarter. The company earned 10 cents a share in the same period last year. Analysts polled by

First Call/Thomson Financial

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expect the company to earn 13 cents a share. Blodget lowered his revenue estimate to $290 million from $324 million for the quarter, below the eight-analyst estimate of $320.3 million.

For the second quarter, Blodget cut his revenue estimate to $340 million from $348 million, on earnings of 14 cents a share, compared with 12 cents a share earned last year. Analysts on average expect the company to post second-quarter revenue of $343.7 million and earnings of 14 cents a share.

Blodget raised his expectations for third-quarter earnings by a penny to 16 cents a share, compared with last year's third-quarter earnings of 13 cents a share. He raised the revenue estimate for the period to $380 million, up from his previous estimate of $369 million. For the fourth quarter, Blodget said he sees earnings of 18 cents a share, as opposed to the 16 cents a share estimated by Wall Street, and revenue of $440 million, higher than his previous estimate of $410 million.

He also maintained his full-year 2001 earnings and revenue estimates of 59 cents a share and $1.45 billion.

In addition, Blodget maintained Yahoo's buy rating, saying he believes its stock "is in the process of bottoming." He added that Yahoo's stock, which could be hit "near-term" by weak first and second quarters, could reach $60 or higher by the end of 2001.

Shares of Yahoo recently tumbled 11.8%, or $5.19, to $38.63 in trading on the