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Subject:  Re: Sirs, have you no sense of shame? Date:  3/10/2001  6:48 PM
Author:  wombat953 Number:  23708 of 123806

In my post 23494 of 5 March, I rhetorically asked:

Henry Blodgett and Her Royal Highness, Mary Meeker, Queen of the Internet, which way PCLN, AMZN, ETYS and the rest of them? Where are you hiding now, Madam?

Well, the Friday WSJ, that protector of the small, the wreteched and downtrodden investor has graciously provided an answer.


E-Business Booster Mary Meeker
Becomes E-Lusive as Bubble Pops

Where is Mary Meeker?

A year ago, the Morgan Stanley Dean Witter & Co. Internet analyst was basking in adulation. Dubbed the "Queen of the Net" by Barron's magazine in 1998, subject of a glowing profile in the New Yorker in 1999, Ms. Meeker graced the cover of Fortune as the third most powerful woman in business later that year, and addressed the World Economic Forum in Davos, Switzerland, in early 2000.

Then the Internet bubble burst. The Nasdaq Stock Market is now down 56% since its peak last March 10 -- and Ms. Meeker has fallen off the radar screen.

She hasn't appeared on CNBC-TV since October, when she was taken to task on the business channel for staying too bullish when the Internet stock bubble burst. She was assailed last month by "60 Minutes II" as being overly aggressive in promoting stocks of Morgan Stanley clients, a charge she denies. And she was dethroned as the top Internet analyst in a widely watched Institutional Investor magazine poll.

In an interview, Ms. Meeker says she never aspired to become a media star, and in fact worried publicly about becoming a "poster child" for dot-com market mania. "I did not aspire to be a media celebrity in any way, shape or form. I felt uncomfortable being in the limelight," she says, disputing speculation that she has been under pressure at the firm to lay low.

Ms. Meeker is far from the only Internet analyst to have gotten it wrong last year. But she has been among the most powerful, partly because her firm has been a top underwriter of Internet stocks.

Ms. Meeker, 41 years old, acknowledges some regret over the "especially disappointing" fate of some of the initial public offerings which Morgan Stanley led and she recommended at the height of the frenzy. In an interview, she cites Ask Jeeves Inc., Inc., Inc., Networks Inc. and Those stocks had all fallen by 67% to 96% as of late last month, according to Morgan Stanley's own calculations.

Some of Internet analyst Mary Meeker's comments over the last two years.

1. April 1999 "There is no doubt in my mind that the aggregate market value for the Internet sector will be a lot higher in three years than it is today."

2. January 27, 2000 " has four million customers, a great brand name ... We believe that as adds more product lines it will also add more customers and more revenue, higher margins, and improving financial results."

3. April 19, 2000 "We hate that falling knife, but in our opinion there are some compelling Internet stock values out there -- perhaps we haven't seen a bottom yet, but, for the leaders, we certainly should be closer to a bottom than to a top."

4. January 24, 2001 "We love the idea that there appears to be a universal perception that Internet-related investing is dead, as we believe it gives us the opportunity to be 'crazy like foxes' and come up with what should be some good money making ideas in 2001."

But she remains resolutely bullish on the online sector, saying its drubbing could represent a huge buying opportunity for selected leaders. And she says the stock-market value that was vaporized among her picks in the dot-com crash is far outweighed by the value created by stocks she has recommended over more than a decade, including Microsoft Corp., America Online, Compaq Computer Corp. and Dell Computer Corp.

"I had a bad year. I would hate to be judged on one bad year," she says in a corner conference room at Morgan Stanley's headquarters in midtown Manhattan. Although she concedes she "stayed too long on some stocks," she did raise plenty of yellow flags amid the dot-com mania. For example, in a March 2000 Webcast to retail clients, she said 90% of "net" stocks were overvalued and 10% were undervalued. And she says she wasn't seduced by the fat fees she and her firm stood to earn on the deals she helped push.

Morgan Stanley took in $479.6 million in fees for Internet IPOs and follow-on offerings in 1998-2000, according to Thomson Financial Securities Data. But Ms. Meeker argues that the fees Morgan received on Internet deals needn't necessarily have posed a conflict to her analytical objectivity, because investment bankers make more money by taking successful companies public. "The bigger they get," she explains, "the more [investment-banking] services they will need."

Ms. Meeker declines to discuss published reports that she received a $15 million pay package in 1999 and widespread speculation on Wall Street that her 2000 pay slipped.

She says the entire Internet sector was engulfed by a series of forces that couldn't have been anticipated, including a slowing economy, uncertainty over the presidential election, the increases in interest rates engineered by the Federal Reserve, and cautionary notes about the economy sounded by President-elect Bush as he campaigned for a tax cut.

What is more, she argues, Morgan Stanley was more selective in the Internet IPOs of stock that it chose to underwrite than some competitors. Indeed, her firm's IPOs generally performed better than those led by major competitors including Goldman Sachs Group Inc. and the Credit Suisse First Boston unit of Credit Suisse Group.

Ms. Meeker says bankers and analysts at the firm misjudged the size of the market opportunity for after the early success of an IPO of Inc., another Web site for women. They thought Priceline's model would work longer than it did. And they and the management team misjudged the costs at AskJeeves.

"There were unique forces at work that we will never see again in our lifetime," she says -- among them the mushrooming of financing volume by Internet companies world-wide, which exploded from $4.1 billion in 1998 to $47.9 billion in 1999 and $35.2 billion in the first quarter of 2000. At that point, she said, "the market for 'new paper' for 'new ideas' was saturated in March 2000."

Ms. Meeker says she and other bullish Internet analysts -- such as Henry Blodget of Merrill Lynch & Co., who took her place as the top Internet analyst in the latest Institutional Investor poll -- are "all being judged on a period that was an anomaly." In hindsight, she says, "whenever you have a gold-rush mentality that's created, and the music stops, it's not pleasant. It's unfortunate."

However, she adds, Internet usage is still growing, and "this will be viewed as one of the most dynamic periods of innovation in the history of the world. The fact that there is more sanity in the market is good. Just when people think it's over is the time it starts up all over again."

It is a message she has been stressing to investors. In a report earlier this year, she said: "Given the performance of tech stocks in general and Internet-related stocks in particular over the last year, the market seems to be saying that 'the Internet is dead,' and many prognosticators seem to be insisting that 'Internet investing was crazy, anyway.' " That view may present "some good money-making ideas in 2001."

Despite the Internet slowdown, Ms. Meeker says she hasn't cut back her workaholic schedule. On Tuesday, she stayed at the office until 12:30 a.m. writing a new report. However, she says she doesn't get approached daily in elevators and taxicabs, the way she used to, by strangers proffering Internet business plans.

She also suggests that one reason she hesitated to downgrade many of the stocks she covered was concern about possible adverse market fallout. At one point in November, questions she raised about whether Yahoo! Inc. would meet revenue targets triggered a 15% downdraft in the stock.

Yet some rivals contend that the number of Morgan Stanley clients clamoring for Ms. Meeker's name on their research reports left her stretched thin. As of last November, she was listed as one of the analysts on 22 different companies. Among Morgan Stanley IPOs touted in reports with her name on them: Artistdirect Inc., AskJeeves and All are down more than 85% since their IPOs. (Morgan Stanley says Ms. Meeker covers just 14 companies as the lead analyst.)

Ms. Meeker, a former desktop-computer analyst, did pioneering research on the Internet dating back to the IPO of Netscape Communications Corp. in 1995 -- well ahead of her chief competitor, Mr. Blodget, who came to prominence as an analyst in late 1998 with a super-bullish call on Inc.

But some money managers say the amount of Ms. Meeker's investment-banking work these days undercuts her credibility. (At one point just over a year ago, Ms. Meeker addressed the board of Time Warner, a Morgan Stanley client, on the advisability of buying AOL, one of her earliest Internet stock picks dating back to December 1993.)

"She became more of a celebrity spokesperson, doing banking deals and all that. I haven't paid attention to her or talked to her or even looked at any of her research in three to four years," says Gary Dvorchak, a money manager at Provident Investment Counsel in Pasadena, Calif.

Questions about how much analysts in general, not Ms. Meeker in particular, are influenced by investment-banking fees were raised just last week by a senior market strategist at her very own firm, Byron Wien. In a Feb. 27 report titled "The Issue of Integrity," Mr. Wien said analysts shouldn't "gloss over a negative change in the fundamentals of a company" due to concerns about investment-banking relationships.

"Investment bankers may believe they will have better relationships with their clients if analysts say nice things about the companies they cover," he said in the report. "But they must realize opinions have little value if the person delivering them has no credibility. Analysts must honestly and openly express their views or their franchises will erode and they will ultimately be of no use to investors or bankers." (Mr. Wien said Ms. Meeker called to compliment him on the report.)

Some rival investment bankers are sympathetic to the plight of both Ms. Meeker and Mr. Blodget. "If you're covering the cruise-ship industry and the Titanic happens, what are you going to say?" says one. "Were there examples where her recommendations overstayed the viability of the business model? Undoubtedly. She is no different from anybody else on that subject," says Storm Boswick, a tech-stock investor at J&W Seligman Co.

Besides, some institutional investors say, they don't focus on analysts' ratings as much as the content of their reports. "I can't imagine any professional fund manager picking up a research report and saying, 'Oh, they went from a hold to a buy. We should load up,'" says William Gurley, a partner at Benchmark Capital, a venture-capital firm.

Ms. Meeker, for her part, doesn't shed many tears over the impact of dot-com carnage on the individual investors who might have been more susceptible than professionals to following her calls. Her "constituency," she notes, is more the institutional clients and mutual-fund managers who invest on individuals' behalf.

She shouldn't be blamed, she says, if individuals enraptured by the average annual gains of 42% on the Nasdaq between 1995 and 1999 put too much of their money in high-risk Internet stocks. "Every individual has got to be accountable for how they're allocating their investments," she says.

As Ms. Meeker takes a lower profile, some say other analysts at Morgan Stanley are getting more of the spotlight. Her colleague, Charles Phillips, who follows software companies, appears to have become more prominent lately, says Caryn Marooney, who runs public-relations firm Outcast Communications in San Francisco.

"The man is Chuck Phillips. His name is coming up much more as the analyst," Ms. Marooney says. As for Ms. Meeker? "We seem to hear her name less."

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