It's neutral now and they're sorry, ROFLMAO, the guy should read less fiction and more finance books I think
Exodus Slide Prompts Morgan Stanley Mea Culpa: Call of the Day
2001-06-19 14:12 (New York)
Exodus Slide Prompts Morgan Stanley Mea Culpa: Call of the Day
New York, June 19 (Bloomberg) -- Morgan Stanley Dean Witter &
Co.'s Jeffrey Camp has a message for investors who bought Exodus
Communications Inc. shares in the past year on his recommendation:
He was wrong and he's sorry.
The analyst today began discouraging investors from buying
shares in Exodus, which manages other companies' web sites, for
the first time since he started following it in 1999. The stock
has since fallen 80 percent and is down 94 percent from a high of
$173.31 in March 2000.
``There are few moments in my career that rival this one in
its difficulty and unpleasantness,'' Camp wrote in a report.
``Elbert Hubbard said, `The line between failure and success is so
fine, we scarcely know when we pass it.' But passed it I have, and
it is time to own up.'''
Camp was unusual in issuing his mea culpa. Apologies are rare
among the hundreds of Wall Street analysts who recommended stocks
at the height of the Internet bubble that now have lost nearly all
their value. Exodus today fell 63 cents to $2.99.
Credit Suisse First Boston's Tim Newington yesterday lowered
his rating on Exodus to ``hold'' from ``buy.'' Both he and
Prudential Securities Inc.'s Michael Turits cut their 2001 and
2002 revenue estimates, though Turits kept his ``buy'' rating.
W.R. Hambrecht & Co.'s Gregory Gore, who never recommended
purchasing the shares, cut his estimates on Thursday.
Telling investors to buy Exodus for so long ``is the worst
mistake I've made'' in 10 years as an analyst, Camp, 32, said in
an interview. ``Today was meant to rectify my mistake.''
Dot-com Debacle
Camp lowered his rating to ``neutral'' from ``strong buy.''
He dropped his revenue estimate for a third time, cutting his 2001
forecast by 8 percent to $1.4 billion and 2002 by 27 percent to
$1.9 billion.
Exodus, based in Santa Clara, California, manages Web sites
for companies including Merrill Lynch & Co., Yahoo! Inc., EBay
Inc., and Johnson & Johnson. The company this year reported a
first-quarter loss of $650 million, slashed 2001 sales forecasts,
and fired Chief Financial Officer Marshall Case.
Sales are falling as Internet companies fail and customers
spend less on information technology. Analysts now worry that
Exodus will run out of cash and won't be able to raise more money.
CSFB's Newington said in his seven-page note that Exodus may
not earn enough before income tax, depreciation and amortization
this quarter or next to comply with the terms of its $600 million
credit line.
Exodus's 11.625 percent senior notes due 2010 have plunged by
more than half since January, when they were trading at about
100 or par, traders said. The notes were recently bid at 47 1/2
cents on the dollar, down almost 13 percent this week, they
said.
In his report, Camp said Exodus will end the year with less
than $250 million cash, down from $1.1 billion at the end of the
first quarter. He pointed out that it will still have access to
the credit line.
``I didn't think the deterioration of the business was going
to be this fast and this extreme,'' Camp said in the interview.
Of the 37 analysts that cover Exodus, 70 percent have ``buy''
ratings on the company and 30 percent have ``hold'' ratings.
Some investors say they want to hear more analysts own up to
their errors.
``Saying these are the reasons why I was wrong and learning
from those mistakes is a part of making yourself a better
analyst,'' said David Rolfe, chief investment officer of Wedgewood
Partners Inc. in St. Louis, which manages about $200 million.
``It's refreshing. If anything we need more of that.''
In writing his apology, Camp cited the words of Hubbard, a
writer who died with his wife on May 7, 1915 when the cruise ship
Lusitania was sunk by a German submarine.
``I read a lot and like some of his stuff,'' Camp said. ``I
was very close to using a W.E.B. Dubois quote that basically says
I may not always be right, but I'm always sincere.''
--David Wells in the New York newsroom (212) 893-3377, or
dawells@bloomberg.net/pas/lk |
