Henry Blodget, the Wall Street analyst who shot to fame during the dotcom boom and provoked a backlash from small investors when the bubble burst, is to leave Merrill Lynch under the firm's voluntary redundancy programme.
The decision by the telegenic 35-year-old to bow out -- and perhaps more tellingly the firm's acceptance of his application -- reflect the reversal in the fortunes of the so-called new economy.
He is set for a pay-off of at least US$2 million on top of a salary deal last year of more than US$7 million, although the Yale history graduate intends to remain in the Internet world, writing a book for Random House about the bubble he helped to inflate.
An aspiring journalist before he joined Wall Street, Blodget earned a following among the US' army of retail investors three years ago after his seemingly ludicrous prediction that Amazon.com's shares would more than double to US$400. In the event his forecast proved too cautious rather than over-optimistic.
The bullish stance by the then junior analyst at CIBC Oppenheimer won him the job of Merrill's Internet analyst then held by Jonathan Cohen, who had been pessimistic about the online bookseller's prospects. Blodget's numerous television appearances also helped him became a hot property on Wall Street. Credit Suisse First Boston was once rumored to have offered him a US$7 million signing-on deal which he turned down.
But, his star status -- he was dubbed Elvis and King Blodget -- was tarnished last year after dotcom companies started to go out of business.
Merrill also agreed to pay US$400,000 compensation to an investor, Debasas Kanjilal, who claimed that a buy recommendation from Blodget on Internet company Infospace had been influenced by the Wall Street firm's aim to win business from the company.
Blodget said little yesterday about his decision to take up Merrill's offer of voluntary redundancy, which has been extended to its 60,000-plus staff worldwide, other than saying that "it just seemed like a good time to pursue the next thing."
"One of the things that happened at the end of the bubble is people forgot what the downside was, and that's why a lot of people got hurt," he said. "If you go back to any period of time whenever markets have crashed, it is a messy affair."
In October 1999, he warned that only three-quarters of existing Internet companies would survive and that between seven and 10 companies could end up dominating the sector.
He is the only high-profile Merrill Lynch employee to have admitted taking up the firm's redundancy offer, which is expected to result in 10,000 job cuts.
Merrill said Blodget's decision to leave had been entirely his own and rejected accusations that his recommendations had turned sour.
"He's decided that he's done all that he wanted to do in research and is going finish his book before going to the buy-side [to be an investor]," a Merrill spokeswoman said.
"Blodget's integrity is beyond reproach."
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