Re: CEO Says Officials Planted Web Posts That Got Him Fired
January 27, 2000
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Overheard:
CEO Says Officials Planted
Web Posts That Got Him Fired
By CARRIE LEE
THE WALL STREET JOURNAL INTERACTIVE EDITION
A dispute between a New York commercial leasing firm and its former chief executive, who was fired after a slew of negative postings about him appeared on Internet message boards, has taken an interesting turn.
Dimitri Papadakos alleges in court documents that the negative postings on a Yahoo! message board (finance.yahoo.com) that led to his firing by the Gyrodyne Co. of America board of directors last March were orchestrated by officials from the St. James, N.Y., company -- including a director.
The allegation was made in an amendment to a defamation lawsuit Mr. Papadakos had filed last spring in New York State Supreme Court in Suffolk County seeking $20 million in damages from Gyrodyne and various online posters, who were listed at the time by their Internet screen names.
The unfolding saga was the focus of a Heard on the Net column last year.
In the lawsuit's amendment, which was filed Jan. 12, Mr. Papadakos named his half brother, Peter Papadakos, a Gyrodyne director at the time, as one of the message board participants. He alleges his half-brother used the aliases "BumnStJames" and "JudgeKennethGyroStarr" to post negative messages.
Former Gyrodyne CEO Sues Firm And Online Investors for Damages (May 21, 1999)
The complaint also alleges that Peter Pitsiokos, Gyrodyne's vice president, corporate secretary and general counsel, fed Peter Papadakos defamatory information for the postings. The posters had accused Dimitri Papadakos of shirking his responsibilities as CEO, causing the company's stock to sag.
"It was outrageous for Gyrodyne to fire Mr. Papadakos when it was apparently orchestrated from within ... they ruined his reputation," says Jacob Zamansky, of Zamansky & Associates in New York, which is representing Dimitri Papadakos. "We believe the [allegations] are false and done maliciously to hurt Mr. Papadakos. He ran the company above board."
Robert Holtzman, an attorney with Kramer Levin Naftalis and Frankel in New York, which is representing Gyrodyne declined to comment, citing the pending litigation. Peter Papadakos, who is no longer a director of Gyrodyne, did not return telephone calls to his home in Reno, Nevada, seeking comment.
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According to court documents, the identity of the person posting as "BumnStJames" and "JudgeKennethGyroStarr" was traced through subpoenas to Yahoo and America Online. Yahoo doesn't collect information to verify the identity of its message board users. However, it provided an AOL e-mail account that allegedly was used by "BumnStJames" and "JudgeKennethGyroStarr." AOL in turn revealed the owner of the account to be Peter Papadakos, according to the court papers.
The messages, which were posted on Yahoo! from November 1998 through March 1999, alleged that Dimitri Papadakos received illegal payoffs and diverted company assets for personal use, among other things. The postings led to an investigation by Gyrodyne's board of directors, which then fired Dimitri Papadakos.
In a separate legal proceeding, which is scheduled for a hearing in February, Mr. Papadakos is seeking compensation from Gyrodyne for the cancellation of his employment contract and for other damages. Dimitri Papadakos was Gyrodyne's chief executive from 1992 until he was fired.
Highflyer Qualcomm Takes a Dive
Shares of highflying Qualcomm dived 16% on Wednesday after the wireless-communications technology company announced a nearly fourfold increase in net income in during its fiscal first quarter, but warned of slower chip sales.
For the quarter ended Dec. 26, Qualcomm reported earnings of $177 million, or 23 cents a diluted share, up from $49 million, or 8 cents a share in the year ago period. Revenue rose 19 percent to $1.12 billion from $941.2 million.
Excluding one time charges, the company said it would have posted earnings of about $192 million, or 25 cents a share. The mean estimate of analysts surveyed by First Call/Thomson Financial was for earnings of 24 cents per share, while the whisper number was 28 cents.
Qualcomm, based in San Diego, is a leading maker of chip sets for wireless phones. The company also holds the patent for code-division multiple access, or CDMA, a fast-growing standard for digital cell phones. Qualcomm earns revenue by collecting royalties from companies that use its code and by selling chips to cell phone makers.
Its chip sales are expected to slow during the next quarter because of seasonal factors, a shortage of handset components and transition to newer chips. The slump in chip sales will be offset by revenue gained by the company's recent sale of its handset business to Japan's Kyocera Corp.
Qualcomm shares lost 24 3/8, or 16.36% to close at 124 5/8 on Wednesday on the Nasdaq Stock Market, after trading as low as 120. Company officials didn't immediately respond to a telephone call seeking comment.
Now, some online investors are questioning whether Qualcomm's highflying days might be coming to an end. Qualcomm was the best-performing stock on the Standard & Poor's 500 index in 1999, gaining more than 2,600%. The stock traded as high as 200 earlier this year.
"I think it is melting time for QCOM. Are we going to see it in the 50s to 80s range?" wrote one investor on a Silicon Investor message board (www.siliconinvestor.com), referring to the company by its stock-ticker symbol.
Other online investors are more upbeat. "Yes, we will see 50's to 80's, but it seems you missed a zero...that is 500's to 800's!...," posted another.
Analysts have had mixed opinions. "The drop in chip business is a short-term issue. Customers had been building inventories, now they will draw down on those inventories," says David Heger, an analyst at A.G. Edwards in St. Louis. "The overall fundamental environment is still very strong." Mr. Heger has a "maintain" rating on Qualcomm shares. "It still hasn't reached a point where we can go back to a purchase rating."
Ed Snyder, an analyst with Chase H&Q in San Francisco, says that Qualcomm's price decline is justified. "At this valuation Qualcomm needs to post continual increases in growth or at least sustain high growth. The valuation is ahead of the fundamentals at this point."
Salomon Smith Barney downgraded Qualcomm shares from a "buy" to an "outperform, " while Merrill Lynch cut its short term rating to "neutral" from "accumulate," but retained its long term "buy" rating. Credit Suisse First Boston and Lehman Brothers reiterated their "buy" ratings.
Qualcomm said it would still meet or exceed the earnings expectations for the current quarter, which a First Call/Thomson Financial survey of analysts puts at 25 cents per share. The company also said it would meet full-year earnings expectations of $1.02 per share.
But Mr. Snyder notes that the playing field has changed. "Qualcomm was the only manufacturer of phones and chips [in the CDMA market], that went on for two to three years and growth went through the roof," he says. "As they were hitting their stride, big guys like Motorola and Nokia started coming in. The competitive environment has changed dramatically. Qualcomm is going to grow, but not as fast as they did last year." Mr. Snyder has retained his "market perform" rating.
Write to Carrie Lee at carrie.lee@wsj.com
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