Six months ago, Greg Konezny was an e-commerce analyst. Today, he follows semiconductor equipment makers. "Last year, eBay, Amazon, Priceline, Buy.com and others made up an industry with a market cap of around $60bn to $100bn. In the last six months, that's vanished," said Konezny, an analyst at US Bancorp Piper Jaffray. "I was looking at what was happening and began to look for a sector that had stability and sustainable growth." Konezny isn't alone. With the once red-hot e-commerce sector losing interest among institutional investors, a number of e-commerce analysts are either jumping ship to new sectors or glomming onto companies outside of the e-commerce world. Investors, as a result, are suddenly seeing new analysts' names attached to their portfolio companies, or having familiar names in the e-commerce space dropping out of sight. Take Henry Blodget, an influential Merrill Lynch Internet analyst who gained notoriety with a lofty $400 per share target price for Amazon.com several years ago. Earlier this month, Blodget picked up coverage on Microsoft. Anthony Noto, a Goldman Sachs e-commerce analyst, has expanded his coverage to include AOL Time Warner. Tim Fogarty, an analyst with Thomas Weisel Partners, has dropped e-commerce coverage in favor of power technology companies. As the downturn has decimated the ranks of e-commerce companies and sent stock prices of others plunging, at least one firm, CE Unterberg Towbin, has abandoned e-commerce coverage altogether. The analysts are responding in part to the interest of institutional investors. These clients, or fund managers, tend to focus on large cap stocks since they offer enough liquidity to buy and sell large blocks of stock. "It doesn't make sense if you're a $15bn fund to put only $5m in a small cap stock. It's too small a position to spend time focusing on it and any larger position you put into a small cap stock can whip the price around," said Andrea Williams Rice, a Deutsche Banc Alex Brown analyst. She noted her firm's e-commerce analyst may also expand coverage beyond the sector. The shifting landscape not only comes from investment banks following their clients' interests, but also stems from reallocating resources. "Before we had three analysts looking at e-commerce, and now we have one analyst," Konezny said. "It's a challenge to remake yourself, but it's something I'm comfortable doing. Before following e-commerce, I followed electronic and industrial manufacturing companies, so I'm comfortable with semiconductor equipment." Goldman is also combining its three Internet analysts into one position, which gives Noto the top Internet, new media and e-commerce companies, a source said. When contacted, Noto declined to comment other than to verify he has started covering AOL Time Warner. Analysts usually cover companies based on two issues. One is whether their banks have conducted any business with the company, such as underwriting their initial public offering, or if a company fits within an analyst's thesis and has interest among clients. "We have to have a thesis. We look at what is the common thread among the companies we cover," said Safa Rashtchy, who conducts all Internet coverage for US Bancorp Piper Jaffray. "This could mean the companies are all taking advantage of a trend like [business-to-business] technology." A common thread was one of several reasons behind Blodget covering Microsoft, said Steve Balog, director of global technology research for Merrill Lynch. He noted that the shift in institutional interest in e-commerce and Internet companies also played a role. "We thought Henry could do a good job with Microsoft, since it is morphing more and more into the Internet space," Balog said. "When we discussed changing our resources, Henry volunteered to take Microsoft... It wasn't like he was looking for stuff to do." When Blodget initiated coverage on Microsoft, he came out with a ratings cut, reducing the firm's recommendation to long-term "accumulate", from the previous analyst's long-term "buy". "We had a couple of institutional investors call their sales guy here. Some of them scratched their heads on why we changed analysts, but no one was upset," Balog said. "These guys are big boys and don't care which analyst is covering a company. The market is smarter than this." Take me to the e-commerce special. Have your say instantly, and see what others have said. Click on the TalkBack button and go to the ZDNet News forum. Let the editors know what you think in the Mailroom. And read what others have said.