CLIMBING BACK UP

Mary Meeker can tell you first hand about bubbles bursting. For much of the 1990s, she was called "Queen of the Net," for her knack for picking tech stocks and helping companies like Netscape go public. Meeker was more than a securities analyst--she was a superstar. Hollywood stars and people on the street pestered her for stock tips. "Aren't you the Internet lady?" a cabdriver once asked. But when the stock market cratered in 2000, the Meeker bubble itself burst. She was vilified by the press (Fortune put her on the cover with the headline "Can we ever trust Wall Street again?"), investigated for allegedly hyping stocks of companies she had as banking clients and, finally, confronted by her boss at Morgan Stanley, Dennis Shea. "You are at a critical juncture in your career," he wrote her in 2002. "Do you want to be a research analyst?"

Yes, she did. And to the surprise of many on the street, Meeker is still at Morgan, and still recommending Internet stocks. Of the handful of superstar stock pickers from the tech boom, she's the only one still standing. Though New York Attorney General Eliot Spitzer investigated her, Meeker was never charged (unlike her old colleague Frank Quattrone, who was convicted of obstruction of justice). And now Meeker is trying to rebuild her reputation and recharge tech stocks. "I'm not hiding out anymore," she told NEWSWEEK. Her latest pitch: a 216-page treatise on the promise of an Internet boom in China. She's also dealmaking again. She played a crucial behind-the-scenes role in last week's $1.7 billion Google IPO, NEWSWEEK has learned. Though she didn't directly pitch Google, she helped Morgan win the IPO deal through her close relationship with the Internet search engine's founders, Sergey Brin and Larry Page. She often dines with the Google guys and was even invited on vacation with them (she turned them down). Google declined to comment.

The timing of Meeker's return is far from perfect. The rocky launch of Google's IPO shows that investors remain skittish about tech. And Meeker faces an uphill battle to get folks to believe in her again. Although her picks this year are up 1 percent while the NASDAQ is off 8 percent, investors are still smarting over how she stuck by bad stocks (notably AOL and Priceline) while the bottom was falling out. In a series of remarkably candid interviews with NEWSWEEK, Meeker was both contrite and defensive about her role in building the bubble. She insists she raised red flags back then. Still, she feels guilty. "It's not easy for me," she says. "People did lose money on the stocks that I recommended, and I'm sensitive to that. I wish we would have downgraded them, and I'll have to live with that the rest of my life."

For investors burned by her calls, Meeker's mea culpa is too little, too late. "Investors lost hundreds of millions," says Thomas Ajamie, a lawyer for small investors. "She never even received a slap on the wrist." Meeker clearly straddled the line between banking and research, cheerleading for dogs like HomeGrocer.com and Women.com, which were also Morgan clients. But she appears to have never crossed the line that tripped up others: she actually believed her stock picks. Unlike other analysts, Meeker's e-mails never privately disparaged stocks she publicly endorsed, investigators found. Some regulators suspect e-mails were destroyed, but Morgan denies that. Meeker says she was annoyed Morgan settled with Spitzer because it made her look guilty. She considered quitting, but decided "this was about my integrity. I wanted to see it through."

Sitting in a large wood-paneled conference room at Morgan's Times Square headquarters recently, Meeker, 44, seems at peace with her past. Though she's guarded about her personal life (she's single, no kids), she claims her 18-hour workdays are a thing of the past. She also says she's gotten over her anger about Spitzer's investigation. And now she doesn't blame him for going after Wall Street's bad players. "I spent a lot of time on the legal stuff, reflecting on what happened," she says. "And these investigations were well founded." Of course, it still irks her to be lumped with the bad guys. And she can quickly rattle off winners she backed: eBay, Amazon. "One of the greatest investments of our lifetime has been New York City real estate, and investors made the highest returns when they bought stuff during the 1970s and 1980s when people were getting mugged," she says, wearing her trademark black power suit. "The lesson is that you make the most money when you buy stuff that's out of consensus." She now sees China as the next tech frontier. And with 25,000 copies of her China report already printed, it's flying off the shelves even faster than her 1995 Internet report, which became the bible of the bubble. "As far as the Internet is concerned," she says, "we're still in the second inning."

And what about Meeker? Is this the second or eighth inning of her career? Rival firms still recruit her, though offering nothing like the $50 million she says Quattrone once dangled. For now, she's sticking with Morgan, where sources say her pay hit $23 million in 2000. But it's not just the payday that's driving her now. She's after the payoff of a tech recovery to vindicate her. "I want to finish this thing," she says. Sounds like the Queen of the Net is ready to reclaim her crown.