Solly's Tech Bears Walk in Blodget's Bullish Footsteps

Until very recently, few people had heard of

Salomon Smith Barney

analysts Richard Gardner and Jonathan Joseph.

That has changed in just two weeks, as the demolition duo took turns rocking the

PC and

semiconductor sectors, respectively. Now, their newfound celebrity has some on Wall Street wondering whether analysts could be turning the bull-market formula for fame and fortune inside out. Is being bearish the wave of the future?

That premise might seem hard to believe. It was only in late 1998 that

Henry Blodget's landmark bullish call on

Amazon.com

(AMZN) - Get Report

swept him from relative anonymity to a $2 million-a-year gig at

Merrill Lynch

. He showed the way for analysts seeking daylight at the end of their career tunnels to find fame by setting outsize price targets on Internet stocks. (See

TheStreet.com's

analyst ranking package for more on this phenomenon.)

Of course, the market was soaring then. Now it's very sloppy and analysts could be starting to make those outsize calls on the downside. That could make the kind of damage semiconductor analyst Joseph visited on names like

Texas Instruments

(TXN) - Get Report

and

Applied Materials

(AMAT) - Get Report

an increasingly familiar sight. He downgraded the chip sector last week on anecdotal evidence that the favorable supply/demand situation is starting to turn.

'Gutsy' Call

"Is he right or wrong?" asks Scott Bleier, chief investment strategist at New York-based brokerage

Prime Charter

. "Time will tell. But the fact is, it's gutsy. It's definitely against the grain of Wall Street. Because it was so different, it received a lot of press. And because it involved the king" -- the semiconductor sector -- "it got a lot of publicity. Everybody knows his name now."

Some fear that if bearishness becomes stylish, fashion-following analysts will drag good stocks into the mud with the pigs.

"It seems like they may let market direction affect their judgment instead of trying to get ahead of the market," says California hedge fund manager Kyle Rosen, speaking more of the analyst community in general than of Solly's bear pair in particular. "They've become less afraid to issue negative reports. Six months ago, that would've been heresy."

John Garrity, the associate research director at New York brokerage

Investec Ernst

, says that with the celebrity and power the bull market has brought them, analysts have moved away from their role as the "window cleaner of capitalism." And with the second quarter's earnings disappointments leaving plenty of blood on the floor, he says "analysts are going to be a lot tougher" on the companies they cover.

"They're also kind of flexing their muscles and showing companies that they can make them or break them," Garrity adds.

Spinning it Forward

Still, traders don't mind seeing an analyst trying to get ahead of some larger trends. And if those trends damage a stock, why is that any worse than, say,

PaineWebber's

Walter Piecyk's

1000 price target for

Qualcomm

(QCOM) - Get Report

after it had already risen 2,600%? (

TSC

wrote about the Qualcomm call.)

But most bring it back to the Blodget effect. "Everyone is on such a short-term basis these days, that you're only as good as your last call," Rosen says. "Blodget's the one who started the whole thing. He became a superstar overnight."

Times have changed some since Blodget made his bones. The market has lost a good deal of its froth. But even with the

Nasdaq Composite Index

some 20% below its high, few would claim that technology stocks are in a bear cycle. In times like this, calling the downside can be a pretty dangerous game. "A lot of people have had trouble trying to call turns like this," Rosen says.

"But if he's right, a call like this can make a career."