Where Mary Meeker Went Wrong

Where Mary Meeker Went Wrong

She may be the greatest dealmaker around. The problem is, she's supposed to be an analyst.

By Peter Elkind
Fortune

April 30, 2001

One day in December 1999--near the top of what we now know as the Internet bubble--a couple of East Coast business types with a few hours to kill were cruising Silicon Valley in a chauffeured car. "Yeah, I know 'em all," announced their driver, as they meandered through the streets of Woodside, an exclusive enclave near Palo Alto. Neil Young, for instance--he lives up in the mountains, the driver said. Why, he boasted, his customers even included Mary Meeker. Would they like to see her new California digs?

Within moments the sedan had pulled up to a wooded, four-acre estate, marked with white pillars and protected by a wrought-iron gate. As his wide-eyed passengers watched, the driver stepped out and punched a security code into the keypad. The gate swung open, the driver pulled the car onto the property, and the gleeful pair scampered about the grounds, checking out the backyard pool and peeking into ground-floor windows like teenaged boys granted admission to Britney Spears' bedroom.

It was a sign of those strange times that a Wall Street analyst could excite such fascination. Then again, Morgan Stanley's Mary Meeker was no ordinary analyst. Anointed by Barron's as "Queen of the Net," lovingly profiled by The New Yorker, equated with Alan Greenspan and Warren Buffett as a market mover by the Wall Street Journal, Meeker was the unquestioned diva of the Internet Age. Tech companies begged her to cover them. Morgan Stanley paid her an eye-popping $15 million in 1999. Ordinary investors hounded her for autographs. During the dot-com craze, Mary Meeker was by far the most important voice for the Internet- -and the notion that companies without earnings could transform the world and climb to the moon.

That was then. Today Meeker, 41, has become something else entirely: the single most powerful symbol of how Wall Street can lead investors astray. For the past year, as Internet stocks have crumbled and entire companies have vaporized, Meeker has maintained the same upbeat ratings on her companies that characterized her research reports in the glory days. For instance, of the 15 stocks Meeker currently covers, she has a strong buy or an outperform rating on all but two. Among the stocks she has never downgraded are Priceline, Amazon, Yahoo, and FreeMarkets--all of which have declined between 85% and 97% from their peak. For this she...

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