Chaos hit Emulex after a false press release about the networking company's financial health hit the Internet Wire. Quickly picked up by wire services Bloomberg News and Dow Jones News Service, the bogus release panicked investors who read that the CEO resigned, the rosy fourth-quarter earnings reported earlier in the month would be restated, and the company would be investigated by the Securities and Exchange Commission. Consequently, company shares dropped as much as 62% before trading on the Nasdaq Stock Market was halted midmorning.
Trading resumed after Emulex denied the validity of the release and shares quickly bounced back. Paul Folino, president and CEO, who didn't resign, said in a company statement, "The negative statements in this fictitious press release are categorically false."
That we know now. But the more interesting question: Whodunit? A disgruntled employee? A conniving rival? According to Emulex, investigations are already underway.