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Star Media plunges on downgrades

Star Media (Nasdaq: STRM) fell over 30 percent Monday after the Internet portal for Spanish- and Portuguese speakers got a couple of downgrades.

Shares were down 15 3/4 to 34 1/4 Monday following the lowered ratings. The stock jumped in February on news of a smaller-than-expected loss in its fourth quarter. The quarter's growth came from bounding traffic and page-views, the company said.

Salomon Smith Barney said it cut the stock from "buy" to "neutral," and Merrill Lynch down graded it from "near-term buy" to "near-term accumulate."

Analyst Lanny Baker at Salomon boosted his 2000 operating income loss estimate to $169 million from $129 million due to increased costs, particularly in marketing. Revenue estimates for 2000 were unchanged, 2001 sales estimates were increased to 18.5 percent.

"Our rating downgrade reflects concerns about an increased and more costly competitive environment in Latin America's online media industry," Baker stated in a report. Baker's 12-month price target on the stock is $45 a share.

Analyst Michael Morin at Merrill Lynch maintained a long-term rating of "buy" on the stock.