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Blodget and Amazon: a long history

Provided here is a sampling of Merrill Lynch analyst Henry Blodget's Amazon-related comments since 1998, drawn from CNET News.com, Reuters and Bloomberg News reports.

Merrill Lynch analyst Henry Blodget, who today lowered his short-term rating on Amazon.com shares to "accumulate" from "buy," has a long track record as a bull for Internet shares.

This is a sampling of his Amazon-related comments since 1998, drawn from CNET News.com, Reuters and Bloomberg News reports:

November 1998: "These (Internet) stocks have a see story: An Amazon bull pulls backtendency to go on runs, and we are clearly on a run here," Blodget says after shares of Amazon climb 4 percent to $131.75.

December 1998: As an analyst at CIBC Oppenheimer, Blodget says Amazon's stock will reach $400. Investors send the stock up $46 to $289 in one day, causing Blodget to clarify that the $400 price target was for 12 months, not one day. Nevertheless, the shares surpass the target within weeks.

January 1999: Blodget writes in a column for CNET News.com: "Unlike with other famous bubbles...the Internet bubble is riding on rock-solid fundamentals, perhaps stronger than any the market has seen before. Underlying the crazy price increases are the foundations of what could become the early 21st century's leading growth companies, a group that in my opinion will include America Online, Yahoo and Amazon.com. So while the October-to-January run-ups have been crazy, the urge to invest in the companies that have seen the biggest pops is not. Just because the Internet stock phenomenon looks like a bubble, it isn't a given that the bubble will burst."

March 1999: Commenting on Internet stocks for the first time since joining Merrill Lynch, Blodget says: "The belief (here is) that the real 'risk' in such open-ended opportunities is not losing money, but missing big upside. The Internet (is) a global megatrend, along the lines of the printing press, the telephone and the computer, that is changing the way companies and people communicate, research, buy, sell, and distribute goods and services, and spend leisure time." Amazon shares are trading at $137 after a 3-for-1 split in January.

August 1999: Internet stocks climb after Blodget makes positive comments about the sector and raises his rating on Amazon to near-term "buy" from "accumulate." Amazon and seven other stocks, he says, should perform well in the holiday season.

October 1999: "We continue to be discouraged by...a steady increase in our loss estimates without a correspondingly large increase in revenue or profitability estimates," Blodget writes in a report about Amazon. "Bottom line, it continues to cost Amazon more than we ever imagined to generate revenue. Although management has now committed to demonstrating that the basic business model works, we are simply exhausted by the endless postponement of financial gratification."

November 1999: "Data released over the weekend show that online holiday shopping is off to a strong, though not extraordinary, start," Blodget writes following the Thanksgiving holiday weekend. "We continue to expect the stocks in the group to be strong over the next few weeks but also continue to think it likely that they will pull back early in (2000)."

December 1999: Amazon shares reach $113.

February 2000: "Seventy-five percent of all Internet companies will cease to exist in the next three to five years,'' Blodget says, speculating that "Amazon could buy eToys because it has expertise that Amazon doesn't have."

June 2000: Blodget says he does not see much "upside to our second-quarter revenue estimate of $585 million," which he attributes to a "slowdown in general consumer spending as the economy begins to slow" and "a slowdown in the consumer Internet industry."

July 26, 2000: Amazon reports second-quarter revenue of $578 million.

July 27, 2000: Blodget lowers his short-term rating on Amazon shares to "accumulate" from "buy." Longer term, "we still consider a positive move in the stock in Q4 likely driven by enthusiasm surrounding holiday sales and as a result of improved sentiment toward e-commerce," he writes in a report. Amazon shares sink as low as $29.50.