“Henry Blodget, whose once-soaring career as an Internet analyst on Wall Street emblematic of the technology-stock mania in the late 1990s, is leaving Merrill Lynch & Co,” writes Charles Gasparino in today’s Wall Street Journal.

“The departure of Mr. Blodget, 35 years old, is part of a broad retrenchment at Merrill, which is in the midst of cutting as many as 10,000 jobs, or 15% of its work force, in the wake of a sharp drop in business on Wall Street. As part of the cutbacks, Mr. Blodget has accepted a buyout offer, a Merrill official said. While Merrill officials have balked at some executives accepting such offers, they didn’t ask Mr. Blodget to stay. The Blodget buyout was reported by the Web site of the New York Times.”

“Mr. Blodget couldn’t be reached for comment; a Merrill spokesman declined to comment.”

“Mr. Blodget achieved fame in November 1998 while at Merrill rival CIBC Oppenheimer, now CIBC World Markets, with his prediction that the stock of online bookseller Amazon.com Inc. would reach $400. The shares, then trading at $240, blew past Mr. Blodget’s target within four weeks — and the analyst became a New Economy darling.”

“In 2000, he received a pay package at Merrill exceeding $5 million and was a regular on both business television and in print for his opinions on technology stocks. Mr. Blodget did predict over the years that 75% of Internet companies would fail. Still, as technology shares began to stumble in the spring of 2000, so did Mr. Blodget’s reputation.”

“Many of his picks hit the skids along with the slide in the technology-heavy Nasdaq Composite Index, and he became the focal point of criticism among some investors who argued that Wall Street analysts helped hype Internet shares so their brokerage houses could win fees in investment-banking deals from those same Internet companies. Wall Street analysts’ pay increasingly is based partly on the amount of investment-banking business generated by their securities firms.”

“In March, a Merrill investor filed a high-profile arbitration claim against Mr. Blodget and Merrill over one of Mr. Blodget’s stock recommendations. In July, Merrill, the nation’s largest brokerage house, agreed to pay $400,000 to Debases Kanjilal, a 46-year-old pediatrician, to settle the case, which was filed with the New York Stock Exchange. In the civil case, Mr. Kanjilal contended that Mr. Blodget maintained a “buy” recommendation on InfoSpace Inc., an Internet stock, to support a lucrative financial deal for Merrill. Mr. Kanjilal said he had a loss of about $500,000 from following Mr. Blodget’s advice.”

“Merrill has long defended Mr. Blodget against his critics. For instance, Merrill initially called the arbitration complaint “unsubstantiated” and said Mr. Blodget’s research wasn’t compromised. At the time of the settlement, Merrill said it resolved the case “to avoid the expense and distraction of protracted litigation.” Mr. Blodget’s departure is part of a broad effort by Merrill to cut as much as $1.7 billion in expenses; the strategic push may include a retreat from several prominent business lines, senior people at the firm say.”