Emulex Recovers from Hoax
N E W Y O R K, Aug. 25 -- Emulex plunged 57 percent today because of what the company says was a hoax press release, but the stock recovered most its losses soon after reopening following Emulex’s efforts to set the record straight.
The stock reopened around 1:30 p.m., some three hours after the hoaxstarted showing up in financial news reports. The hoax temporarily wiped more than $2 billion off the stock’s market capitalization, leaving it at around $2 billion during the halt. But since reopening, Emulex — a California-based high-tech company that makes parts and software to help computers network — has regained most of its lost ground.
The release, which appeared on the Internet around the time of themarket’s opening bell, claimed Emulex would restate fourth-quarterearnings to swing to a loss from a profit, and that regulators wereprobing accounting irregularities. The release also claimed Emulexexecutives were stepping down. The company, based in California,vehemently denied the release.
Trying to Counteract the Hoax“It’s totally bogus,” said an Emulex spokeswoman. “None of the information is true. It’s business as usual.” The spokeswoman added that the company was in the process of composing a press release to that effect, and trying to track the source of the hoax through Nasdaqand the Securities and Exchange Commission.
Emulex said in a press release this afternoon that business remainsat “record levels” and that a just-completed audit of fiscal 2000 results showed no need for any restatement.
Emulex also said it “contacted the appropriate authorities, who areinvestigating this matter.” The company continued that it plans “tolaunch our own investigation into this fraudulent release.”
News Spread QuicklyThe false press release first appeared on Internet Wire, an Internet-based distributor of corporate news, at around 9:30 a.m. EDT.It was then distributed to a number of other news services, notablyBloomberg. The press release wasn’t distributed by the leadingbusiness press release disseminators, BusinessWire andPRNewsWire, and didn’t appear on one of the leading Net newsaggregators, Yahoo! Finance.
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