<OT> Beware!>
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. |
