AOL Users Top 32 million

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AOL Time Warner Inc.'s flagship Internet unit said Monday that its subscriber base surpassed 32 million last week, driven in part by AOL 7.0, the new version launched last month.

But some analysts said the world's largest Internet service provider was adding new subscribers slower than most Wall Street consensus estimates.

AOL has 38 days to reach its net subscriber additions estimate of 1.7 million -- an estimate that is on the lower end of Wall Street estimates, said SG Cowen analyst Scott Reamer in a research note.

"To achieve our estimates, AOL will have to add 30,000 subscribers a day for the rest of the quarter -- a feat not accomplished last year during the fourth quarter, when AOL added 2.1 million members during the quarter, or 20,000 a day," Reamer said in the note. "While this will not immediately affect P&L (income statement), shares have traditionally reacted negatively to disappointing net subscriber adds."

He added that the weaker subscriber additions could be a factor of the aftermath of the Sept. 11 attacks on the United States during which AOL temporarily suspended advertising.

AOL said in a statement that its members already have downloaded AOL 7.0 more than 7 million times, the fastest adoption rate of any new version.

"I think the rate of subscriber additions is decelerating on a relative base. That's just natural," said Paul Kim, analyst at Kaufman Brothers. "I think the real question is not this year, but next year and what the 2002 environment looks like and what the decelerating curve looks like."

Analysts have raised concern about the AOL unit, which has been one of the Internet and media giant's primary growth engines, and its cash flow and revenue growth.

Earlier this month, SoundView Technology analyst Jordan Rohan cut his subscriber growth targets for the fourth quarter by about 150,000 to 1.75 million and 2002 forecast by 325,000 to 6.175 million.