Twitter's New Top Banker Was a Tech Bubble ClownS

Anthony Noto just came out of Wall Street retirement for one big score: he's going to lead the Goldman Sachs blitz behind Twitter's IPO, hoping to make it the biggest tech stock craze of our time. And Noto knows something about crazes: he helped hype some of the worst tech stocks from the last bubble.

When it comes to promoting money-losing companies like Twitter, Noto's scorecard has been well-stamped for over a decade. For years before dot-com disasters like eToys and Webvan imploded, Noto ignored financial data and common sense to cheerlead those stocks to investors and the general public—millions of dollars were lost because loser tech companies were whitewashed. As one of the hot tech analysts of the late 90s, Noto was quoted in the press and aired as a cable news pundit in the name of unfettered optimism—all on behalf of his employer, Goldman Sachs. The bank had underwritten the IPOs of companies that are now cautionary tales, synonymous with the market implosion of 2000—but even with good reason to say the opposite, Noto told everyone the sky wasn't just not-falling, but blue, bright, and profitable.

In 1999, Noto wrote this in his CNET column:

Within my coverage universe, there are four companies that can guide the sleigh to the top of the roof to deliver on the promise of this e-holiday based on the above criteria: Amazon.com, Ashford.com, Barnesandnoble.com and eToys.

In 1999, The Street noted that Noto was still "banging his toy drum":

As we wrote about weakness in eToys yesterday, we silently wondered when Goldman Sachs analyst Anthony Noto would come out with a note pushing the stock. Noto has been unabashed in his praise of eToys, perhaps because Goldman was the lead underwriter for eToys' IPO back in May. Well, sure enough, Noto was banging his toy drum today, noting that eToys had announced that it had more than 1.5 million customers already in the quarter, which was more than 30% ahead of his quarter-end estimate of 1.16 million. Noto said the numbers reinforced his belief that eToys will beat his revenue estimate of $81.9 million by more than 25%.

Facing doubts about eToys' performance in 2000, Noto said the following in the LA Times:

“I think the market will continue to fund the leaders, and EToys is a leader."

From a 2000 eCommerce Times article about Webvan's sliding performance:

Goldman Sachs analyst Anthony Noto, citing "another strong quarter," reiterated Webvan's position on the firm's "recommended list."

About 25 percent of all orders include at least one non-grocery item, "indicating that Webvan's strategy to own the 'last mile' and provide products beyond groceries is working," Noto wrote in a research note.

In 2000, ABC News observed the following about Goldman:

This past spring, Noto and Goldman Sachs created a list of e-commerce companies most likely to survive. Seven of the eight top candidates were—surprise!—clients of Goldman Sachs. Noto wouldn't talk to us about this, but when The Wall Street Journal raised the issue, Noto insisted his research is "independent from our corporate relationships." You could have learned about those corporate relationships in the research reports, but it's always in the fine print at the end, and you rarely hear about it on TV.

The message boards for Motley Fool are littered with comments about Noto's bullish stance, like this one from 2001:

If you take a look at his coverage and comment history on some of the dot-turds that Goldman did underwriting for (PlanetRx jumps immediately to mind; ETYS, WBVN there are lots), you'd see things that might even make Blodget blush.

My Rule #1: Disregard Anthony Noto's "recommendations"

My Rule #2: Refer to Rule 1

Considering Henry Blodget’s lifetime ban from the securities industry, that’s pretty damning. This kind of behavior earned him the nickname "Anthony No Dough, Anthony Don’t Know" from CNBC reporter David Faber.

But like Blodget and Mary Meeker, the “utterly compromised” Morgan Stanley securities analyst turned general partner at Kleiner Perkins, Wall Street's renewed interest in tech stocks offers Noto a chance to burnish his reputation—or to be the rah-rah junk-peddler our new decade sorely doesn't need. But as long as he doesn't end up the next Michael Grimes, Morgan Stanley's dorky, video game-loving banker partly responsible for Facebook’s disastrous opening day, at least Twitter will be happy.

Anthony Noto did not reply to an inquiry regarding his record as a Goldman Sachs analyst. Feel free to ask him yourself.