Crash, spurned: Analysts desert former tech stars

Washington, May 16: AFTER Beyond.com Corp went public in 1998, a half-dozen Wall Street analysts raved about the online software retailer’s prospects, helping to send its shares soaring to a peak of $41. Now the shares trade at 35 cents apiece, and just when investors might need more information than ever on the company’s outlook, it is hard to find. Five of the six Wall Street analysts who once covered it no longer do.

Add this to the indignities suffered by battered technology companies: They are starting to be ignored. Wall Street firms quietly have dropped analyst coverage on dozens of now-small tech companies in recent months. Many investors say it will only get worse, sending most of these names further into oblivion.

“For the dot-com companies, I sort of think that the loss of coverage is starting rather than ending,” says Joel Tillinghast, manager of the $8.5 billion-in-assets Fidelity Low-Priced Stock Fund.

In some cases, Wall Street firms have dropped companies that they took public, and, in nearly all cases, the analysts had been urging investors to buy the stocks all during their slides, only to drop coverage at the point when investors needed the most guidance. “It’s very frustrating if you’re already in the stock,” says Mr Tillinghast, who manages the largest mutual fund that invests in small-company stocks.

According to research by Marketperform.com, a Web site that tracks analysts’ recommendations, individual analysts have dropped coverage 81 times so far this year, and, in many cases, companies have seen two or three analysts drop their research efforts, which can equal half of their total coverage.

-- The Wall Street Journal