Internet hoax hits Emulex

The internet spread the fake news more quickly

Computer networking company Emulex was the victim of a hoax press release on Friday.

Shares in the company plunged by more than 60% after an unknown fraudster posted a press release on an internet wire service claiming the company's chief executive had resigned.

The negative statements in this fictitious press release are categorically false.

Emulex chief executive Paul Folino

The release, which appeared on Web-based news dissemination service Internet Wire as the markets opened at 9:30AM Eastern Daylight Time in the United States, said that Emulex had been forced to restate 1998 and 1999 earnings, as well as revise the fourth quarter to a loss from a gain.

The release was also picked up by Bloomberg's internet service, causing thousands of investors to dump the stock before trading was halted by the Nasdaq marketplace at 10:33AM EDT.

The stock later recovered to 107.234, down 5.829 or 5%.

Victim of a fraud

Internet Wire spokeswoman Amy Orebaugh apologised for the release, which appeared to come from a public relations company.

Emulex said the release was not from them.

"We have not put out a company press release today," said Kirk Roller, Emulex senior vice president of sales and marketing. "Someone put out a release that looks like an Emulex release, using the Emulex name and logo.

Emulex President and Chief Executive Paul Folino said in the statement: "The negative statements in this fictitious press release are categorically false."

The company was launching its own investigation into the matter, and has contacted the SEC and Nasdaq to investigate who was responsible for the false release.

Bloomberg spokeswoman Chris Taylor said the wire service was "evaluating Internet Wire as a source of information."

Internet Wire provides a service for companies who wish to publish their press releases on the internet.

Other shares affected

Analysts said the hoax also hit the share price of QLogic, another networking company.

"If you were a long on either stock and jumped out on this supposed news you got murdered," Said Bill Meehan, chief market analyst at Cantor Fitzgerald.

"A lot of people are going to take a big loss. I have no idea who it is but I'm sure the government will be very interested in it," he added.