September 21, 1999
Blitz of Message-Board
'Spam'
Cooks Shares of Foodvision
By JASON ANDERS
THE WALL STREET JOURNAL INTERACTIVE EDITION
It's a fact of life on most message boards: If you want
to discuss stocks on the Web, you're going to have to
slog through some spam postings. Most users
grumble and move on.
But one particularly aggressive
spammer managed to get
investors' attention -- and send a
tiny Internet company's stock
soaring -- after he spent a morning peppering a
popular stock-chat site with hundreds of messages.
Starting around 2 a.m. EDT last on Sept. 14, someone
using three different aliases posted 337 messages on
Silicon Investor (www.techstocks.com) about
Foodvision.com (www.foodvision.com), a company
that plans to start a food portal on the Web. The blitz
lasted five hours.
"This guy was really something," says Bob
Zumbrunnen, the administrator of the Silicon Investor
Web site. "I've never seen anything like this. It's
definitely a record." He says the user apparently
provided false information when establishing the
multiple accounts, but he declines to identify him.
On the day the messages were
posted, Foodvision shares surged
as much as 56%. The stock
traded as high as 81.25 cents on
the OTC Bulletin Board as
volume jumped to 838,000
shares, up from 109,000 shares
the previous day. Foodvision was
quoted at 71.8 cents Tuesday
afternoon.
Stock spams often try to associate a small, unknown
company with larger, more established firms, and this
case was no exception. One of the two messages
posted over and over on Silicon Investor quoted
unnamed sources as saying Foodvision.com had inked
deals with Internet giants Yahoo! and Excite. Another
said Foodvision shares were poised to reach $5.
Paul R. Smith, Foodvision's chief executive, says his
company had nothing to do with the postings, and says
the claims about deals with the two search portals are
"absolute lies." (A spokeswoman for Excite, a unit of
Excite At Home, says that company has never heard of
Foodvision. Yahoo also denied there was a deal.)
Mr. Smith says he thinks it's unfair to attribute the
spike in the company's share price to the spam on the
message boards. "It could be day traders getting
excited" about the company, he says.
Spam is a constant headache for computer users.
While most spam comes in the form of e-mail, many
spammers have added message-board postings to their
arsenals, since they're a sure-fire way to reach
investors.
Often, e-mail spam promotes business opportunities
or adult Web sites. But regulators say they're seeing
growing use of spam as a tool for promoting
investment in unknown companies, often with
promises of big returns.
Since many stock-chat Web sites have lax registration
procedures, it can be relatively easy for someone to
create multiple accounts and flood the boards with
promotional messages. Both Yahoo! Finance
(quote.yahoo.com) and Raging Bull
(www.ragingbull.com), two of Silicon Investor's
competitors, recently installed automated systems that
prevent users from posting messages containing
phrases or Web addresses known to be used in recent
spam campaigns.
Silicon Investor also has an automated system for
alerting the site's administrators of spam, but Mr.
Zumbrunnen says it wasn't necessary the day the
Foodvision messages appeared. "All of the users were
yelling about it," he says. The site has a message board
called "SI Spammer Hall of Fame" where users post
spam that they find on the boards, and that board was
buzzing the day the Foodvision spam appeared.
"People are usually pretty quick to run these guys
right out of town," he says.
Mr. Zumbrunnen says he tried to delete as many of the
messages as he could before the market opened. "I
tried to minimize the effect he was going for. These
guys really bother me." Serious spamming offenses --
as this one was -- mean users lose their memberships
on the site, which cost $60 for six months.
Foodvision was formerly Mark I Industries, a
Marietta, Ga., company involved in the food industry.
The company issued a news release in July
announcing that it was changing its name to
Foodvision.com, and refocusing its business on a
food-related Web site of the same name. The company
plans to offer everything from cooking tips to online
shopping.
But so far, only two things are available at the site:
some general statistics showing the size of the food
industry and the amount of goods bought and sold on
the Internet (along with a statement that the market
potential for Foodvision is "staggering"), and a
countdown to the Nov. 1 launch of Foodvision's
"super portal."
This isn't the first controversy involving spam and the
company. In November 1998, Sprint sued Mark I after
someone sent thousands of e-mail messages touting
Mark I's stock, and forged the return address to make
it appear as though they had been sent by the
telecommunications giant. Scores of irate recipients
replied to the message, and the glut of e-mail
temporarily shut down Sprint's corporate messaging
system.
Sprint says it traced the spam to an account created
with a credit-card number apparently stolen from a
Florida teenager. "We weren't sure where the
messages came from, and we're still not entirely sure.
But we had to sue someone," says Mark Bonavia, a
spokesman for Sprint.
Mr. Bonavia says Sprint had originally asked to be
compensated for damages in its lawsuit, filed in
federal court in Kansas City, Kan., but dropped the
case after Mark I agreed to a permanent injunction
barring it from using Sprint's name.
Foodvision's Mr. Smith says the company wasn't
involved in the Sprint matter.
Some message-board users noted that Foodvision is
featured on Market Pulse Journal, a
pay-for-promotion Web site
(www.market-pulse.com). Steve Fleming, a
spokesman for the site, says his company was given
400,000 free-trading shares of Foodvision in
exchange for providing investor-relations services in
an agreement struck in July. He says Market Pulse had
nothing to do with the Silicon Investor spam. "We
only know what we've heard about it," he says.
According to news releases issued by Mark I in 1998,
the company was focused on acquiring restaurant
franchises. In one release, dated Oct. 12, 1998, Mark I
said it operated nine restaurants, including three
Kenny Rogers Roasters franchises. That statement
also said the company had entered into a conditional
contract to acquire five Ponderosa Steak House
restaurants in Florida for $4.4 million, which
according to the company would generate $4.4
million in revenue.
The release went on to say that "assuming Mark I
achieves its revenue goals, the company's stock should
trade in the $4 range."
But there have been several changes in Foodvision's
business since those releases.
Mr. Smith says the company still owns the nine
restaurants, though the Kenny Rogers stores have been
renamed and are no longer affiliated with the Kenny
Rogers chain. (Kenny Rogers Roasters filed for
bankruptcy protection in 1998 and was later
acquired.) Two of Foodvision's restaurants are run as
corporate cafeterias, he says.
Mr. Smith says the Ponderosa deal fell through.
He says the company had revenue of $2.2 million last
year, but declines to say whether it turned a profit.
"We're completing the audits right now and then we'll
become a fully reporting company," he says.
Recent news releases issued by the company have
focused on its Foodvision portal, including one that
said the company was moving into larger offices and
another that announced the hiring of a financial
auditor.
Mr. Smith says Foodvision plans to update investors
on the changes in its restaurant business soon. "You're
going to be seeing some more press releases coming
out in the next couple weeks where we'll explain all of
this," he says.
Write to Jason Anders at: jason.anders@wsj.com. |
