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Merrill Lynch downgraded Internet-software firm Inktomi (INKT
) to near-term neutral from accumulate, and long-term accumulate from buy and slashed estimates.
Analyst Henry Blodget says the shortfall is due to a 70% quarter over quarter decline in Network Products revenues. He says the revenue guidance is 43% below his $65 million estimate. He cut the one-cent 2001 EPS estimate to a $0.50 loss, and cut the $0.24 2002 EPS to a $0.03 loss.
Blodget doesn't see profitability until June 2002. His other concerns include reduced visibility in Network Products, weakening performance in Internet Search and a potential overhang from option repricing. Long-term, Blodget is concerned about the impact of lower bandwidth prices on caching demand and execution risks in enterprise caching.