• by November 9, 2000

This week has seen some conflicting reports about the health of the online advertising industry. Notably, a CBS Marketwatch story earlier this week started off with, "Just when investors in online ad companies might have thought it couldn't get any worse, it did."

The story was referring to latest announcement of disappointing results and 200 job cuts at 24/7 Media - that's 17% of its force - and an earnings warning and abrupt resignation of the CEO at Engage. Stock prices, once again, took a nose dive.

Not surprisingly, Goldman Sachs and ING Barings downgraded Engage, while 24/7 Media got the same treatment from Merrill Lynch, J.P. Morgan and CS First Boston. And, analysts are saying there's definitely more room to go on the downside.

David Doft of ING Barings was quoted saying, "we are not seeing an uptick in ad revenues in the fourth quarter," traditionally strong for ad revenues as a result of holiday- related spending.

The only analyst to stay optimistic on 24/7's future was Rudolf A. Hokanson at CIBC World Markets, who remained bullish and reiterated his "strong buy" position and 12-month target price of $50 per share.

In a research report titled "Risk and Reward Time," Hokanson said, "We continue to believe that ... Internet advertising is alive and well. Weak players are falling off, but traditional advertisers are warming to the medium due to its ability to provide rewarding marketing and branding solutions."

That said, what's your prognosis?