The online advertising market appears to be stabilizing, but we believe it will continue to remain challenging for the foreseeable future.

We continue to think some upside is possible to these estimates, despite weakness in the online advertising market. We are not looking for as much upside as in the past, however.

We continue to believe Yahoo! will make a good long-term investment. As a result of the challenging advertising environment, however, we believe the stock could see significant downside in the next three to six months.

We continue to believe in the long-term growth of online advertising. Near-term, however, we don't believe the market will bottom until the first quarter. We estimate only single-digit year-over-year market growth in the first quarter.

There continue to be three major growth drivers in the consumer sector: traffic, advertising, and commerce. Traffic growth in the U.S. continues to slow, as more than 50 percent of the total market is already online. More importantly, we estimate that more than 80 percent of disposable income is already online.

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.

The sentiment surrounding the leading companies in the consumer Internet sector appears to be improving as we approach the seasonally strong fall and winter period. We continue to believe that some of the leading consumer advertising and e-commerce stocks -- America Online, Yahoo, and Amazon.com -- will benefit from this.

The majority of AOL's profits are derived from its pure advertising and commerce revenue, so strong sequential growth in this line is critical to the long-term growth story.