Henry Blodget, the fair-haired stock analyst who became a symbol of the Internet mania that enriched some investors but ultimately cost many others dearly, is giving up the business of publicly rating stocks.
Late Wednesday, he confirmed that he had accepted a buyout offer that his firm, Merrill Lynch, extended to about 50,000 employees this month. "It just seemed like a good time to pursue the next thing," Blodget said.
Blodget, 35, became famous among U.S. investors after correctly predicting in 1998 that the share price of Amazon.com would soar to $400. But that turned to infamy as Amazon and many others among the Internet stocks he recommended plunged. Several companies that Blodget praised in published reports and television interviews, including Pets.com, a unit of IPET Holdings, and eToys, failed before ever turning a profit.
Blodget, a year ago the top-ranked Internet analyst in the influential annual survey by Institutional Investor magazine, has fallen to a No. 3 ranking this year, and some investors said his stock calls had less resonance in the market.
But Deepak Raj, a managing director who oversees domestic stock research at Merrill, said Blodget's resignation was not a result of pressure from Merrill's clients or management.
After the Internet stock bubble burst, the performance of analysts became the subject of investors' recriminations and securities regulators' scrutiny. Some critics said analysts colored their advice to help their firms win companies' investment banking business; others complained that analysts had become credulous enablers of market madness.
"Henry was typical of the era," said Eric Von der Porten, a hedge-fund manager at Leeward Investments in San Carlos, Calif. "I rarely saw much questioning of the company's line."
Blodget, who married last month, said he planned to spend the next three to six months writing a book for Random House about the Internet stock bubble, then pursue a job at a hedge fund or money-management firm.
Blodget's severance package is estimated to be worth about $2-million.