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|Advanced Medical Optics Inc. |(EYE-NYSE) |$21.98* |

Note: More details to come; changes are highlighted. Except where noted, and highlighted, no other section of this report has been updated.

Reason for Report: Flash Update: ABT acquires EYE

Prev. Ed: January 23, 2009; Enters into a definitive agreement to be acquired by Abbott

Flash Update

On February 26, 2009, ABT announced that EYE is now a wholly owned subsidiary of ABT and has been renamed Abbot Medical Optics Inc.

On February 20, 2009, EYE announced its 4Q08 and FY08 financial results. Highlights are as follows:

• Net sales were $285.2 million in 4Q08, down 6.4% y/y. Net sales were $1.2 billion in FY08, up 8.6% y/y.

• GAAP EPS was $0.40 in 4Q08, compared to ($0.20) in 4Q07. GAAP EPS was $0.97 in FY08, compared to ($3.22) in FY07.

Details, other news update and broker comments will be provided in the next edition.

Portfolio Manager Executive Summary [Note: not changed since the last report]

Advanced Medical Optics (AMO or EYE) has a broad product portfolio and is one of the largest dedicated competitors in the ophthalmology market. AMO has a leadership position in the laser vision correction industry with roughly 60% market share in the US and the most comprehensive advanced technology offering, including all laser-LASIK. The company also has a solid market position in cataract surgery, including premium intraocular lenses (IOL).

Of the 10 firms providing ratings on EYE, 9 firms (90%) gave neutral ratings, and one firm (10%) provided a negative rating.

Neutral (Neutral or equivalent outlook) – nine firms or 90%: Target prices range from $7-$22. The cautious analysts note that the most important issue facing the company is the current economic uncertainty. Given the magnitude of the US economic downturn and its impact on international expansion, they believe investors are likely to be hesitant to aggressively buy stocks with exposure to discretionary consumer items. EYE’s shares traded off significantly in the recent time based on concerns about the company’s ability to regain lost market share following the recall of Complete MoisturePlus, economic uncertainties, and their potential effects on laser vision correction growth, and risks to the 2008 EPS guidance. Analysts are concerned about US laser vision correction procedure volumes, despite the recent IntraLase transaction, which enhances the company's laser vision correction franchise. In fact, the Lasik market continues to deteriorate due to a slowing economy and the constrained consumer. As for the cataract sub-segment, the analysts believe that an expanding refractive IOL market will benefit AMO.

Further, the analysts believe investors would like to see several quarters of earnings that are not influenced by one-time charges to get comfortable with the earnings power of the company. The analysts note EYE’s secular revenue growth outlook falls in the low-to-mid, single-digit range as opposed to management’s view that revenue will increase in the high, single-digit range in the future. Overall, the firms believe that the risk-reward ratio is balanced until they see more supportive signs of a sustained economic recovery, better traction of new products, and progress with cost cutting initiatives. The analysts’ expected return on the current share price is -33.11%.

Bear (Negative or equivalent outlook) – one firms or 10%: Target price of $9: The bearish analyst believes that due to a second product recall and delays in new product launches, eye care revenue suffered considerably and only in recent times it seems to have recovered. However, the analyst believes that EYE shares will be penalized for both growth and management credibility issues, offsetting the stock's appeal based on theoretical intrinsic value.

Long-Term Outlook

Overall, the analysts have a favorable long-term outlook for AMO’s business. Looking forward, the analysts see an opportunity for accelerating earnings in 2009 and 2010. As AMO’s sales migrate toward higher-margin products, such as laser vision correction, premium IOLs, dry eye solutions, the gross margin is expected to trend up. The enhanced sales base will likely allow the company to gain some additional SG&A leverage as the sales and marketing infrastructure is not expected to witness significant growth in the near term.

January 23, 2009

Recent Events [Note: not changed since the last report]

On January 12, 2009, Advanced Medical Optics announced that it will be acquired by Abbott Laboratories for $22 per share in cash, or $2.8 billion, inclusive of debt.

On January 2, 2009, FDA announced the recall of a surgical agent (Healon D) manufactured by EYE on grounds that it had been linked to several eye problems. This product is used in cornea transplant, cataract removal, and other ophthalmic procedures.

Overview [Note: not changed since the last report]

Consequent to its spinoff from Allergan, Advanced Medical Optics, Inc. (NYSE: EYE) became an independent public company on June 29, 2002. The company is a global leader in the development, manufacture, and marketing of medical devices for the eye and contact lens care products. EYE’s products in the ophthalmic surgical market include intraocular lenses (IOLs), phacoemulsification systems, viscoelastics and surgical packs used in cataract surgery, and microkeratomes used in refractive surgery. The company’s eye care products include disinfecting solutions, daily cleaners, enzymatic cleaners, and lens rewetting drops. In 2004, EYE began offering frequent replacement soft contact lenses in selected markets. Advanced Medical Optics, Inc. (also referred to as AMO) is based in Santa Ana, CA. The company conducts its operations in 27 countries, and markets products in approximately 60 countries. More information is available on the company’s website .

Analysts identified the following factors as crucial for considering an investment in EYE:

|Key Positive Arguments |Key Negative Arguments |

|● EYE is the largest player in refractive surgery, the 2nd largest player in|● EYE’s key business, contact lenses, is a highly competitive industry with |

|cataract surgery, and the 3rd largest player in lens care solution. |significant competition from several well-established manufacturers. |

|● The realization of operating cost savings and organizational synergies is |● Despite the launch of new products, brokerage firms expect the present |

|expected to result in an enhanced corporate profit profile, bolstering the |weakness in eye care revenue to continue, given the erosion of hydrogen |

|company’s long-term earnings growth potential. |peroxide sales. |

|● EYE has an impressive product pipeline. |● EYE’s operating environment remains challenging, as multifocal IOL |

|● The ILSE acquisition by EYE combined the industry’s most advanced laser |expectations contract, laser vision correction remains stagnant, and the |

|vision correction technologies, positioning EYE as a definitive source for |company loses share in the contact lens care solution market. |

|refractive innovation. |● Volatility in the market for laser vision correction and EYE’s dependence |

| |on third party suppliers, high levels of “one-time charges” related to |

| |merger integration and product rationalization, and higher-than-average |

| |foreign exchange rate exposure, as roughly two-thirds of revenue are outside|

| |the US, placing the shares of EYE at high risk. |

Note: The Company’s fiscal year coincides with the calendar year.

November 11, 2008

Revenue [Note: not changed since the last report]

The company reported total revenue of $275.6 million in 3Q08, up 1% y/y (including a 2.7% increase related to currency effects). AMO’s 3Q08 results reflect the ongoing impact of deteriorating economic conditions on its refractive business, particularly in the US and Europe. However, the company reported sound results, on a global basis, in the cataract segment. The Zacks Digest total revenue was $275.7 million in 3Q08.

US sales decreased y/y to $99.6 million in 3Q08 from $115.5 million in 3Q07. International sales grew y/y to $176.1 million in 3Q08 from $157.7 million in 3Q07.

AMO reaffirmed its 2008 revenue guidance range of $1.17 billion-$1.20 billion.

Provided below is a summary of total revenue as compiled by Zacks Digest:

|Revenue ($ in Million) |3Q07A |2007A |1Q08A |

|Cataract/Implant |129.3 |118.9 |(8.7)% |

|Laser Vision Correction |96.0 |112.1 |(14.4)% |

|Total Ophthalmic Surgical |225.3 |231.0 |(2.5)% |

|Eye Care |50.1 |42.1 |19.0% |

|Total |275.6 |273.2 |0.9% |

Provided below is a summary of segmental revenue as compiled by Zacks Digest:

|($ in million) |

|Positive |0%↓ |

|Neutral |90%↑ |

|Negative |10% |

|Avg. Target Price |$13.90↑ |

|Median Price Target |$10.00↑ |

|Maximum Target |$22.00↑ |

|Minimum Target |$7.00 |

|No. of Analysts with Target price/Total |10/10 |

|Upside from Current |-35.9% |

|Maximum Upside from Current |1.5% |

|Minimum Upside from Current |-67.7% |

Of the ten brokerage firms assigning ratings on EYE, nine assigned neutral ratings and one provided a negative rating.

Capital Structure/Solvency/Cash Flow/Governance/Other [Note: not changed since the last report]

Balance Sheet and Cash Flow

As of September 26, 2008, AMO had $35.0 million in cash and cash equivalents on its balance sheet and $1.5 billion in debt. In 3Q08, the company generated $89.0 million in cash flow from operations and spent $9.0 million on capital expenditures (free cash flow was $80.0 million). The free cash flow was used to pay down debt.

Acquisition: On January 12, 2009, AMO and Abbott announced a definitive agreement for Abbott to acquire AMO for $22 per share in cash, for a total transaction value of approximately $2.8 billion, inclusive of estimated net debt. The $2.8 billion estimated value of the transaction is based on AMO's approximately 62 million fully diluted shares outstanding, plus estimated net debt. The Boards of Directors of AMO and Abbott have approved the transaction. Abbott and AMO expect the transaction to close in 1Q09.

Restructuring Plan Update: During 3Q08, the company continued to execute its previously announced (in February 2008) restructuring plans designed to enhance its global competitiveness, operating leverage, and cash flow. Restructuring initiatives are now being expanded, with a goal to deliver an additional $10 million-$15 million in incremental savings in 2009. The existing restructuring plan is still on track to generate $12 million-$16 million in annualized savings, including $4 million-$7 million in 2008. Management now looks to implement additional cost-cutting measures in 2008, in order to realize further benefits in 2009. While restructuring already targeted manufacturing, head count (reduced by 4%), and administrative facilities, management is “going to look at everything” to reduce cost. Target areas will include capital expenditures, travel and discretionary spending, and some R&D (though management insisted that the belt-tightening will not impact key pipeline opportunities).

Janaury, 23, 2009

Potentially Severe Problems [Note: not changed since the last report]

There are none other than those discussed in other sections of this report.

November 11, 2008

Long-Term Growth [Note: not changed since the last report]

Five brokerage firms covering the company published a 3-5 year EPS growth rate. The average long-term growth rate is 18.1%. The low-end projection is 10% (Zacks Investment Research, FTN Midwest Res., Piper Jaffray) and the high-end projection is 31% (Wachovia).

EYE has a solid position in most of its markets, a strong distribution franchise, and exciting new products. Brokerage firms expect new product introductions to expand its revenue growth, particularly in the Ophthalmic Surgical segment. Further, the firms believe that management will continue to successfully pursue strategic opportunities and alliances when appropriate, enhancing EYE’s sustainable long-term revenue and earnings growth potential.

With a broad product portfolio that addresses the entire continuum of care for laser vision correction, Advanced Medical Optics continues to remain optimistic about its market growth opportunity. Management continues to attribute most of the deceleration in procedure growth to patients being reluctant to undergo laser vision correction due to perceived safety concerns, over that of consumer spending patterns. However, with the recently acquired WaveFront Sciences diagnostic technologies, the IntraLase femtosecond laser flap creation technology, and its CustomView procedure, the company argues it has all the latest capabilities to provide the best clinical outcomes. EYE’s LASIK, multipurpose solution (MPS) and presbyopia correcting intraocular lenses (PCIOLs) are expected to be growth drivers in the long term.

The analysts from the Digest group continue to believe that ophthalmology remains an attractive therapeutic sub-segment due to its high QALY scores, under penetration of target markets, and high returns. EYE would make an attractive takeout if valuation continues to stay depressed.

January 23, 2009

Upcoming Events [Note: not changed since the last report]

On January 30, 2009, EYE expects to release its 4Q08 and FY08 financial results.

Individual Analyst Opinions [Note: not changed since the last report]

POSITIVE RATINGS

None

NEUTRAL RATINGS

BMO Capital – Market perform ($7) – January 12, 2009: The firm reiterated its rating and target price.

Zacks Investment Research – Hold ($22) – January 13, 2009: The firm reiterated its rating and target price.

BAS-ML – Neutral ($11) – November 3, 2008: The firm maintained its rating and target price. INVESTMENT SUMMARY: The firm believes that risks remain from challenges to its high-margin LASIK, multifocal IOL and contact lens solution businesses and the potential breach of its debt covenants.

Citigroup – Hold ($7.50) – November 2, 2008: The firm reiterated its rating and reduced the target price from $11 to $7.50. INVESTMENT SUMMARY: The firm foresees margin expansion for the next few years as the company recovers from the recall of its Complete MoisturePlus lens care solution.

FTN Midwest Res. – Neutral ($22) – January 13, 2009: The firm downgraded its rating from Buy to Neutral and established a new price target of $22 per share predicated upon the acquisition price of $22. INVESTMENT SUMMARY: The firm believes that ABT is poised to acquire one of the most attractive ophthalmic assets along with a seasoned management team, the first executive management to formerly recognize and address the melding of the traditional cataract and refractive markets, steeped in ophthalmic industry expertise at a compelling valuation.

Goldman – Neutral ($9) – November 7, 2008: The firm reiterated its rating and target price.

Jefferies – Hold ($22) – January 14, 2009: The firm maintained its rating and increased the target price from $7 to $22. INVESTMENT SUMMARY: The firm believes that the macroeconomic pressures affecting U.S. and overseas LASIK volumes, combined with an unanticipated slowdown in lens care and growing concerns about management credibility, are expected to put continued pressure on EYE shares.

Piper Jaffray – Neutral ($22) – January 13, 2009: The firm maintained a Neutral rating and increased the target price from $8 to $22.

Wachovia – Market perform ($7.50) – November 3, 2008: The firm reiterated its rating and decreased the target price from $15.50 to $7.50. INVESTMENT SUMMARY: While the firm believes the IntraLase acquisition was a smart move and EYE’s EPS growth can begin to accelerate in 2009, it does not expect EYE’s valuation to change meaningfully, until US consumers gain confidence.

NEGATIVE RATINGS

Thomas Weisel − Underweight ($9) − January 6, 2009: The firm maintained an Underweight rating and increased the target price from $8 to $9. INVESTMENT SUMMARY: The firm believes that the management of the company is focused on applying free cash flow to debt pay down and the poor business conditions could limit more meaningful debt reductions and potential covenant violations.

|Research Associate |Rajiv Mukerji |

|Copy Editor |Richika Bhandari |

|Content Ed. |Richika Bhandari |

|No. of brokers reported/Total | |

|brokers | |

|Reason for Update |Flash |

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February 26, 2009

Research Associate: Rajiv Mukerji, MBA

Editor: Kinjel Shah, C.A.

Sr. Ed.: Ian Madsen, CFA; imadsen@; 1-800-767-3771, x9417

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