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To: elpolvo who wrote (25115)	7/12/2000 11:41:59 AM
From: Dealer	Respond to of 35685

RNWK-Up 14%--Put my wad in this one this morning. Rumors are flying around all sorts of stocks. Few are true. The Lehman note is positive and Lehman's analyst is bullish on RNWK and his price target is $150. -------------------------- 06:41am EDT 11-Jul-00 Lehman Brothers (Stanek, Michael) RNWK RealNetworks, Inc: Advertising Revenues - Cause for Concern? INVESTMENT HIGHLIGHTS : * We remain comfortable with our modeled 2Q00 topline of $58.7 MM and operating EPS of $0.05. Company will report earnings on July 18th. * Judging by the # of recent calls, we believe there may be investor concerns over the exposure RealNetworks has to online advertising revenues. We expect some near-term weakening in the stock price due to these concerns. * Major reasons why we believe the impact from online advertising to be minor: (1) Ad revn currently only accounts for ~15% of total revn. (2) Most contracts are a combination of eCommerce; ads; and technology agreements. (3) Lehman`s Internet Media analyst estimated that online advertising was $3.6 bill in 1999 - Real`s mkt share was only 0.4%. With $4.8 bill predicted this year, Real`s mkt share will only be 0.9%. * We remain very bullish on the `REAL` position of RNWK - as a true technology enabler. We see plenty of room to grow in all 3 segments, and all this `hoopla` will set up a nice buying opportunity. INVESTMENT THESIS: Advertising revenue contracts, a combination of technology, eCommerce, and ad agreements, continue to make up only a minor portion of RealNetworks overall revenue stream. Reals advertisers include America Onlines Instant Messenger; Covad DSL (digital subscriber line provider); Sonic Mail (streaming voice messages) and Ashford.com (department store). We believe that some investors, concerned with the slowdown in spending on online advertising, will take a shoot first, ask questions later-type of philosophy to all stocks with any online ad exposure, including RealNetworks. We anticipate that all this hoopla will cause some weakening in RNWK stock, and create an excellent buying opportunity for those investors who recognize the REAL positioning of this company as a true Internet technology enabler.