From TheStreet.com..Merrill Grabs Blodget to Burnish Its Outlook
By George Mannes
Staff Reporter
2/23/99 7:01 PM ET
Merrill Lynch (MER:NYSE) will be more bullish on the Internet.
That seems to be the upshot of the news broken by TheStreet.com Tuesday that CIBC Oppenheimer Internet analyst Henry Blodget is jumping over to Merrill, to replace Jonathan Cohen, who left earlier this month to join online investment bank Wit Capital.
Blodget's enthusiastic tone runs counter to the investment community's perception of Cohen, who made his share of positive calls on Internet companies but remains better known for his negative ones.
"It's Merrill trying to reverse their moniker from being a bear on the Web to being a bull on the Web," says an analyst at a rival firm who spoke on condition of anonymity.
Cohen, who has described himself as partly a "meta-psychologist" in his attempts to follow market behavior, made a name for himself with bearish calls. Ironically, Cohen and Blodget became linked after their contradictory predictions on Amazon.com (AMZN:Nasdaq).
Blodget, a former journalist and a recent TSC Net Summit '99 panelist, achieved a measure of notoriety in December with a bullish call on Amazon.com, predicting it would rise to a split-adjusted $133.33 in a year (or $400 in pre-split shares). Cohen weighed in later to predict that the virtual bookseller will drop to a split-adjusted $16.67 (or $50 pre-split).
The online bookseller, which traded as high as 199 in January, rose 8 11/16 Tuesday to 115 3/16.
Blodget didn't return a call to his office at CIBC Oppenheimer; Cohen, whose new firm was experiencing phone problems Tuesday, didn't respond to an interview request emailed to his office. A Merrill Lynch spokeswoman wouldn't confirm that Blodget was moving to the firm.
Reached at Silicon Alley 99, an Internet conference in New York, EarthWeb (EWBX:Nasdaq) CEO Jack Hidary described Blodget as "very smart." Hidary added: "He understands the confluence of publishing, the Internet and commerce -- the three titans coming together. Merrill will be very well served by the addition of Henry Blodget."
Christopher Lord, senior analyst with Amerindo Investment Advisors, said he thinks Blodget's addition will help Merrill get more business as co-manager of Internet stock offerings.
"Co-management slots are all about who your analyst is," Lord says. "I think Cohen was controversial because of his negative calls."
One of those -- a December 1995 assertion that Netscape Communications (NSCP:Nasdaq) was overvalued -- has rung true, in retrospect; Netscape which traded as high as 87 that month, has never completely recovered. On the other hand, when Cohen declared the Internet sector overvalued in February 1996, America Online (AOL:NYSE) was trading below 10, split-adjusted. The stock closed at 88 Tuesday, up 1 1/2.
We'll see how well Blodget does with Amazon.com.
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