JNI Corp., saw its stock fall 38 points on Friday, a drop that the company attributed to a pair of news articles which it called misleading, and prompted JNI to request that Nasdaq halt trading on the stock.
The articles in question, one from TheStreet.com and the other from the Dow Jones Newswire stated that JNI was concerned about revenue from sales of the SBus interface because Sun Microsystems plans to discontinue the SBus in its enterprise servers. Friday's news also stated that the San Diego-based company was looking to replace CEO Terry Flanagan. JNI said the articles reached erroneous conclusions about its business and caused confusion in the minds of its investors.
Chris Wildermuth, director of corporate communications for JNI said that following the publication of the articles, the stock began dropping faster than the overall market, which was in a sell-off over worries about technology sector earnings and uncertainty in the Presidential Election.
"Regrettably, Dow Jones published their stories before they called JNI to independently verify the information," he said. "Before the company could effectively address the stories, there was a run on the stock, we believe largely led by momentum-oriented day-traders, sending the stock down 38 points for the day. At that point, Nasdaq agreed to our request that trading be halted."
During a press conference on Monday, CEO Terry Flanagan fielded questions from financial analysts and the media looking to quell any concerns about the company's present and future stability. "To us it's just business as usual at JNI. We wouldn't even be having this call if it wasn't for these two ridiculous articles," said Flanagan. "We're running our business focused on making our quarter."
According to Flanagan, the news of his expected retirement was made public months ago and that he intends to remain with JNI until a suitable replacement can be found.
Flanagan said that the articles also implied that Sun is JNI's major customer and that they buy 80% of the company's HBAs, and that a decision by Sun not to purchase JNI's SBus products would make this business go away. "Nothing could be further from the truth. Sun is an OEM customer, but not a major customer for JNI," asserted Flanagan.
JNI's chief financial officer Gloria Purdy said that the company projects the SBus segment of its business to have strong growth through the middle of next year when it will experience a flattening out.
In anticipation of a possible SBus slow down JNI is taking steps to balance any negative effects on its market presence by addressing the growing PCI market. "[This] has been central to JNI's strategy for several years," asserted Flanagan.
"Our goal has been to build a strong base of products using the PCI bus, and to eventually migrate from SBus to PCI bus as the market dictates." He added that PCI supports all types of operating systems, whereas SBus runs only under Solaris operating system. "By introducing PCI products, JNI has been able to broaden its support to servers running all the major operating systems used in storage networks today: Solaris, Windows NT and Windows 2000, HP-UX, AIX, Novell NetWare, and Mac OS."For more information: Kevin Komiega, assistant news editor