Analyst Slashes Estimates for Web Firms
Goldman Sachs reduces forecast for both e-commerce and new media companies as it expects online advertising to decline by 8 percent year over year.
This is not what the Internet community wanted to hear: Goldman, Sachs analysts today cut their estimates for both advertising-dependent new media companies and e-commerce companies, citing further economic uncertainty following the attack on the United States.
In an advisory to clients, GS said that “we are lowering our online advertising forecast for 2001 to $7.6 billion (an 8 percent year-to-year decline vs. previous estimates of a 6 percent decline) and now forecast 2002 growth of 10 percent to $8.3 billion vs. our previous estimate of 15 percent growth.”
“Correspondingly, we have lowered estimates for CNET Networks Inc., Homestore.com Inc. and Yahoo.”
For Homestore and CNET , “we would note that we have lowered estimates not only due to our expectations for lower online ad growth but also for company-specific factors (the impact of a potential significant housing slowdown for Homestore and a decline in spending from technology companies for CNET,” GS said.
For Yahoo, GS now estimates 2001 revenues of $700 million vs. a previous estimate of $715 million, and for 2002, it sees revenues of $765 million, down from an earlier forecast of $825 million.
On the e-commerce front, GS said it is lowering its 2001/2002 industry forecast to 25 percent growth from 35 to 40 percent and to 15-20 percent from 25-30 percent growth.
“Correspondingly, we have lowered revenue estimates for Amazon.com (we still forecast 4Q01 EBIT profitability), and 1-800-Flowers.com , but maintained earnings per share estimates due to cost controls We are maintaining our already conservative estimates for eBAY in 2002.”
For e-commerce companies, the analysts wrote that “the impact of the terrorist attacks and uncertainty of ongoing conflicts, both foreign and domestic, further exacerbates the declining trend in consumer confidence and thus consumer spending on the heels of unfavorable trends in employment levels and consumer credit.”
GS said it lowered its estimate for Amazon revenues for 2001 to $3.05 billion from $3.16 billion and for 2002 it now estimates Amazon revenues at $3.54 billion, earning 39 cents per share.
Just last week, Goldman, Sachs reduced estimates reduced estimates for all three of the major publicly traded players in the online travel sector following the events of last week.
