Fewer ads cause WebMD to revise outlook

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Shares of WebMD parent company WebMD Health Corp dipped 12% yesterday after the company revised its outlook due to a lack of healthcare advertisers spending money with the firm. 

Shares fell $3.57, or 12.3%, to $25.46 in afternoon trading, the Associated Press reported. 

WebMD now expects net income for the year between $29.5 million and $37.5 million down from prior estimates for profit of $36.5 million to $46 million.

The AP reported that Citigroup analyst Mark Mahaney lowered his outlook on WebMD for 2008. He reiterated a "hold" rating on the stock.

Goldman Sachs analyst Jennifer Watson said the degree of the company's outlook revision and its explanation that drugmakers are hesitant to commit to advertising spending six to 12 months in advance, were surprising. 

“The biggest question is whether the slower trends are WebMD-specific or industry-wide," Watson wrote in a note to clients. “Specifically, we wonder if advertisers are testing lower-cost options, including emerging ad networks that deliver impressions across smaller consumer health and beauty sites.”

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