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To: 2MAR$ who wrote (8366)	7/24/2001 3:55:56 PM
From: 2MAR$	Respond to of 208838

-Microsoft MSN lowers Euro ad forecasts (recasts, updates with previous Microsoft MSN forecasts) By Bernhard Warner, European Internet Correspondent LONDON, July 24 (Reuters) - Microsoft MSN -- Europe's most popular Web portal -- has pushed back forecasts for breaking even in Europe and expects sharply lower growth amid a gloomy online advertising market. The unit of Redmond, Washington-based Microsoft Corp. <MSFT.O> told Reuters it now expects its European advertising revenue -- the bulk of its portal business -- to grow by more than 50 percent over the next year, down from 250 percent in the previous year that ended in June. In December last year, before the global economic downturn had really begun to bite, Microsoft MSN told Reuters its portal would become profitable in Europe within 12 months. On Tuesday, Judy Gibbons, vice president of Microsoft MSN's Europe, Middle East and Africa division, told Reuters that while Microsoft does not disclose specific revenue figures for MSN, it was now looking to turn a profit in five of its 15 European markets within 18 months. Gibbons said total revenues grew by 250 percent -- helped by other revenue streams such as subscription services -- for the fiscal year ending June 30, 2001. Last December she had forecast advertising revenue growth of three to four times. Gibbons admitted that advertising revenue had been in decline for MSN over the past year, but this was now expected to turn around. The biggest media companies in the industry, most notably Yahoo! Inc. <YHOO.O>, have all been hit by the downturn. Over the past year, Microsoft has signed up blue-chip advertisers to buy ads across Microsoft's network of sites. These include Credit Suisse First Boston, which currently sponsors MSN's Financial Channel and Nestle SA's Kit Kat, which sponsors MSN Messenger. Internet research firm Jupiter MMXI in June predicted online advertising revenue in Europe would grow 27 percent, to 1.2 billion euros ($1.1 billion) in 2001. "We expect to grow twice that (the industry predicted rate of 27 percent)," Gibbons said, citing MSN's recent gains in Web traffic. The software giant's network of sites are now the most popular in Europe. Still, outperforming the industry by such a wide margin would be a startling achievement, particularly in such difficult conditions. Kai Kaufmann, internet analyst for Dresdner Kleinwort Wasserstein in London, told Reuters he expects online ad revenue in Europe to grow by about 20 per cent in 2001. He based his projections on forward-looking statements made by Yahoo! Europe, Germany's T-Online <TOIGn.DE> and France's Wanadoo <NAD.PA> earlier this year. Kaufmann was sceptical that even MSN could pull in such numbers. "I think that's very high," Kaufmann said. The global online advertising market has softened in the past year, a victim of the dot-com sector's demise. Microsoft's promising outlook is very much at odds with the industry. Media companies have recently taken to rolling out more subscription-based services for their sites, hoping consumers will pay for anything from news stories and crossword puzzles to music downloads, as ads have so far failed to pay the bills. Gibbons said she was encouraged by the response from big advertisers interested in promoting their services and products across the Microsoft sites. "We see advertising as the majority revenue part of our business for the next couple of years," she added. According to Jupiter MMXI, Microsoft has asserted itself as the top traffic generator in Europe, scoring four of the five most popular Web domains across the continent. MSN.com, which includes the popular Web-based e-mail service Hotmail, is number one, attracting 20.3 million unique users in June. Microsoft.com ranked second, while Microsoft's Passport.com and MSN Messenger Service ranked fourth and fifth across Europe, according to Jupiter MMXI. The only rival to crack the top five was Yahoo!, at number three with 17.2 million unique visitors in June.