Blodget Cuts Ratings on 11 Online Firms
Merrill Lynch & Co. analyst Henry Blodget, one of the early bulls on Internet stocks and long a powerful voice in the sector, said Monday he cut his ratings on EBay Inc. and 10 other online companies because growth in the industry is slowing and competition is picking up.
But whether many investors in the stocks are paying attention to Blodget is debatable: Several of the stocks he downgraded rose anyway Monday.
“When you have a new industry emerge, you have a 70% to 75% failure rate,” Blodget said in an interview. “The first stage [of booming growth] is over” for Net firms.
The downgrades followed months of generally negative comments by Blodget on the sector. Many of the stocks have already crumbled this year.
Blodget cut EBay from “near-term buy” to “near-term accumulate.” The stock (ticker symbol: EBAY) eased 75 cents to $50 after falling as low as $47.87.
He also downgraded Barnesandnoble.com (BNBN) to “near-term neutral,” but the stock surged $1.44 to $5.19 on news it is teaming with Microsoft to open a digital book store. Also downgraded by Blodget was Internet ad-services firm DoubleClick Inc. (DCLK). Yet it surged $3.44 to $38.63.
Among other shares whose ratings were cut, EToys (ETYS) slipped 13 cents to $4.13; 24/7 Media (TFSM) fell $1.38 to $10.06; IVillage (IVIL) gained 31 cents to $6.75; and Pets.com (IPET) rose 16 cents to $1.44.
