Report Card: Lanny Baker

Lanny Baker Salomon Smith Barney
	Report Card 2* Overall rank 2* Rank by institutions 13* Rank by stock picking Makes money for me Saves me from disaster Makes me think Tells the truth Meaningful service, not overkill Well-connected *Out of 28. Best star rating is 3 stars. Click here for our methodology.
2nd Place Internet Software and Services

Biography

B.A., Yale University. Baker was a media analyst at Donaldson Lufkin & Jenrette and Morgan Stanley Dean Witter before joining Salomon Smith Barney in 1993 as a specialist in online media.

Industry Outlook and Style

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Since coming to Wall Street in 1989 from Yale (where he and Henry Blodget lived in rival houses), Lanny Baker has been studying the media. Stints at DLJ and Morgan Stanley gave him exposure to media ranging from publishing to satellites, so by the time he joined Salomon in 1993, Baker was a full-spectrum analyst.

Baker quickly recognized the potential of the Internet, foreseeing that AOL(AOL) and Yahoo!(YHOO), for example, would evolve as media rather than Internet companies. "The media business is pretty simple: While there are no absolute answers, the bigger your audience, the better your business," explains Baker.

Baker says the increasing popularity of the Internet will continue to fuel the growth of advertising dollars, so online media represents the best current angle on the sector. "Near-term dot-com deathwatch has everyone running scared from online advertising, but this is a simple and super-powerful secular story that supersedes 2Q 2000 concerns about dot-com spending," he wrote in an email.

Still, he's not rosy on all companies in the group. "The online media sector currently has a structural problem in that there may be too many companies with too little brand equity and scant marketing expertise chasing each other for audience share and user attention," Baker wrote in a June 21 report.

In that report, Baker spelled out his case for coming consolidation that will successfully drive "scale, breadth, profits and improved valuations" in this sector, noting that in today's market, "profits are priority number one." The race is to the swift, he said: "The first movers will get the pick of the crop as consolidation unfolds."

In his bullishness, Baker downplays the effects of privacy concerns on revenue growth, feeling that the threat has been exaggerated by some in the analyst community and the press.

Among the institutional investors in TheStreet.com's analysts' survey, Baker has a reputation for objectivity. "I think he's been independent in his thinking, not like a lot of his competitors who are linked to their banking deals," says one voter.

"Rather than just reporting, he does actual work and analysis, which is what Wall Street should be doing and isn't," comments another voting portfolio manager. And one recalls the insights Baker provided after a Yahoo! meeting: "Lanny was the only one on Wall Street who took the data points given by management and then sliced and diced the information. The others talked about international growth and wireless in general, while he came up with investable conclusions."

Stock Pick

Favorite stock for the next 12 months:
America Online

Comment:
"The combined company AOL/Time Warner(TWX) will define the shape of online media and at the same time be a free cash flow dynamo."


Rate Their Stock Picks: Which stock do you like best? Blodget/Baker AOL Meeker* Yahoo! * Blodget and Baker each gave us their top stock pick. For Meeker's pick, her firm identified Yahoo! as a stock on her list of stocks expected to outperform others in the industry.

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