The rules relating to denying rumors are based in securities laws and there is very little guidance.
BUT, the general rule is that if you DON'T make the statement it is not a material (mis)statement, and there is NOTHING the company should or is obligated to do.
If the Company embarks on a process of denying all false rumors, the pain maybe worse than the gain. It would first have to determine whether the rumor is material. Then a rather extensive investigation would be conducted to find out if the rumor were true, then it must determine what to comment on, if anything.
If the Company embarks upon this path, then rumors not denied, might be deemed to be true. This would require the analysis of the demographics of the rumor, a determination of the credibility of the source, and an acknowledgement that the Company is no longer the source of information about the company.
This is why most Firms that think about making denials, don't.
Intel was faced with a similar situation a couple of quarters ago, and only restated that nothing had changed from previous guidance, but a careful reading of previous guidance encompassed the essence of the rumor.
The better opinion is that management should not be saddled with that responsibility and that to speak to rumors would introduce an elements of unreliability.
If the rumor is substantive and if the facts are true, and if it differs from previous guidance, and if the facts are "material", then management then has an obligation to disclose, assuming they are aware of the facts.
Slow sales of Ipaq, assuming arguendo that it were true, as emotional as it would be is probably not "material", in an of itself.
Duke |
