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Blodget Lowers Net Advertising Outlook

The analyst now sees no growth this year.

Merrill Lynch Internet analyst Henry Blodget is taking yet a dimmer view of Internet advertising in general and DoubleClick (DCLK) in particular.

The Internet bull, whose enthusiasm for the sector has been sorely tested over the past few months, once again revised downward his outlook for the Internet advertising market in 2001. Blodget is now predicting that U.S. Internet advertising will stay flat at $8 billion for the year. Six months ago he was predicting 30% to 40% growth, but he'd already cut his growth forecast to 15%.

DoubleClick, the Internet advertising bellwether that is expected to report its fourth-quarter earnings Thursday -- one day after

Yahoo!

(YHOO)

-- will meet its recently lowered expectations, Blodget said, though he added that there's still a risk of a downside miss.

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Analysts surveyed by

First Call/Thomson Financial

are predicting a loss of 2 cents a share on revenue of $127 million for the fourth quarter, worse than its third-quarter profit of 3 cents a share on revenue of $135 million. (Merrill has done underwriting for DoubleClick.)

DoubleClick's shares were trading off 50 cents, or 5%, at $9.50 each, Monday afternoon.

Blodget attributed his Net advertising reappraisal to dot-com advertising cutbacks that were "faster and deeper" than expected, combined with a weaker overall advertising market.

But Blodget did hold out a measure of optimism. After their long fall, advertising-driven Net stocks have stabilized over the past six weeks, he said, adding, "We think they are in the bottoming process." The Net advertising market should strengthen in the second half of 2001, he said, and the worst quarter should be the first, when ad revenues will probably show a decline of 10% to 15% from the fourth quarter.