SAN FRANCISCO -- Henry Blodget is at it again, pumping up Internet stocks -- this time as an analyst at Merrill Lynch instead of CIBC Oppenheimer. Blodget, who made his name at CIBC in December, when he predicted Amazon.com (AMZN) - Get Report would hit 400 per (presplit) share, initiated coverage of three Internet stocks at his new job at Merrill today.

Blodget rates both Amazon.com and

Yahoo!

(YHOO)

near-term accumulates and long-term-buys. He began his coverage of

America Online

(AOL)

with a near- and long-term buy recommendation.

For Amazon, Blodget has set a 12-month price target of 150. He writes: "In our opinion, Amazon.com is investing money, not losing money (an important distinction). Management is committed to building long-term shareholder value at the expense of the near-term bottom line -- an unsettling, but in our opinion, a smart strategy."

Amazon was last up 6 1/6, or 4.7%, to 136. AOL traded up 1 9/16, or 1.7%, to 91 11/16, and Yahoo! was lately up 4 11/16, or 2.8%, to 171 1/8.

Speculation Heats Up on Lycos

Now that

CMGI

(CMGI)

CEO David Wetherell has made it clear he wants a better deal for

Lycos

(LCOS)

shareholders, speculation is running rampant on who might be a better partner for the portal company, if not

USA Networks

(USAI) - Get Report

.

One of those options could be an outright purchase of Lycos by CMGI,

The Wall Street Journal

reported. The newspaper said Wetherell, whose company has about a 20% stake in Lycos and who was one of the founders of Lycos, said investment bank

Morgan Stanley Dean Witter

was also looking at other Internet companies that might be interested in merging with Lycos. Morgan Stanley was enlisted by CMGI to help find a plan to get Lycos shareholders a better deal than the one proposed with USA Networks last month.

Lycos shares were last up 13 7/16, or 14%, to 109 3/4, while CMGI gained 4 3/4, or 2.4%, to 199 1/8.

Software Downgrades and Estimate Cuts

It's a bad day for some major software companies. Morgan Stanley Dean Witter analyst Chuck Phillips lowered his rating on

Computer Associates

(CA) - Get Report

to neutral from outperform. His rating change was based on near-term softness in MIPS (millions of instructions per second) growth and a more competitive environment as competitor

BMC Software

(BMCS)

expands with acquisitions, according to

CNBC

. Computer Associates develops software that helps companies maintain their systems.

Computer Associates was last down 6 11/16, or 16.7%, to 33 5/16.

Where is the bottom? After a hearing cautious tone at

SAP's

(SAP) - Get Report

analyst day on Tuesday in New York City, analysts greeted the German software giant this morning with a wave of earnings cuts.

Credit Suisse First Boston

analyst George Gilbert cut his 1999 license revenue growth to 0% from 4%. He also lowered his 1999 earnings per share estimate to 59 cents from 61 cents.

Salomon Smith Barney

analyst Neil Herman lowered his fiscal 1999 estimate to 62 cents from 66 cents per share and lowered his fiscal 2000 estimate to 80 cents from 83 cents per share. Herman maintained his outperform rating on the stock.

"The official comment on the quarter was that business was sluggish," Gilbert wrote. "We were left with the impression that this quarter is very back-end-loaded, and there is limited intermediate-term visibility. ... We continue to believe the giant of the application space is in the midst of journey into the era of inter-enterprise applications. During this transition, we continue to advise caution." CS First Boston has not underwritten for SAP and maintains a hold rating on the stock.

SAP fell to its lowest level in more than a year this morning. The shares last traded down 1 7/8, or 6.9%, to 25 1/2.

Finally, an Acquisition

Israeli software firm

Oshap Technologies

(OSHSF)

was one of the top gainers on the

Nasdaq

, rising 2 15/16, or 28%, to 13 1/2 after

SunGard Data Systems

(SDS) - Get Report

said it would buy Oshap in a $210 million stock-swap deal.