Bidz CEO Denies Citron Research Claims
\nCNNMoney.com<\/p>\n
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Bidz.com CEO Denies Claims of Shill Bidding, Excessive Inventory in Citron Research Report
\nNovember 27, 2007: 07:16 PM EST<\/p>\n
NEW YORK (Associated Press) – Bidz.com Inc. Chief Executive David Zinberg late Tuesday denied several allegations in a Monday report by Citron Research, including that the company engages in shill bidding, holds excessive inventory and pays him 30,000 shares each month.<\/p>\n
Citron Research _ formerly known as Stock Lemon _ publishes reports online about companies it believes are misleading investors.<\/p>\n
In a conference call, the online jewelry auction site operator’s CEO called the report “untruthful and negative.”<\/p>\n
Zinberg also denied that shill bidding occurs on Bidz.com, saying the Culver City, Calif., company has strong policies against it.<\/p>\n
He noted that up to 25 percent of the jewelry sold through the site is sold below cost, saying, “If we had shill bidding, we would not have jewelry sold at a loss.”<\/p>\n
Zinberg also refuted the report’s assertion that Bidz’ inventory levels are rising at least 300 percent higher than the company’s revenue run rate.<\/p>\n
Zinberg said high inventory levels are critical to Bidz’s development since the company needs to bring in products and authenticate them before it can sell them.<\/p>\n
The CEO also called allegations that he is paid 30,000 shares per month “absolutely false.”<\/p>\n
The report also alleges that Saied Aframian, who is a major Bidz shareholder and an owner of Bidz.com jewelry supplier LA Jewelry, has a criminal history.<\/p>\n
On Tuesday, Zinberg said that he has known Aframian for seven years and was not aware of any criminal record until Monday.<\/p>\n
“Bidz.com has a long relationship with LA Jewelry and has never had any reason to question the integrity of its dealing with Mr. Aframian as a shareholder,” Zinberg said.<\/p>\n
According to an LA Times article from June 1986, Aframian was convicted in 1985 of receiving stolen property at his Los Angeles-based secondhand jewelry store.<\/p>\n
The Citron report was published online Monday by Citron editor Andrew Left. After it came out, Bidz shares began to decline. The stock fell 17 percent, or $3.38, to finish at $16.56 that day; on Tuesday, the shares sank $4.67, or 28.2 percent, to $11.89 on volume of more than 13 million shares. The average daily volume is under 500,00 shares. The stock has traded between $6.82 and $22.50 since its shares listed on the Nasdaq in June.<\/p>\n
“Stocks react to truthful information. Stocks don’t react to innuendo. So therefore, saying that my report made the stock go down _ no, the information in the report gave concern to investors,” Left said in a phone interview prior to the conference call Tuesday.<\/p>\n
Left said that he shorts Bidz’ shares, which implies he stands to profit from a drop in the stock price.<\/p>\n
Left added that he had not been contacted by Bidz.<\/p>\n
Zinberg said that Bidz will pursue legal action against Citron during the next few days, and that he thought the company needed to address the report because of the stock’s reaction.<\/p>\n
In an e-mail note responding to Citron’s report, ThinkEquity analyst Edward Weller wrote, “Most, if not all, of the ‘facts’ Citron cites are correct or ‘technically’ correct (i.e., sort of), but we are not sure that many of the ‘facts’ mean quite what Citron believes them to mean or hints that they mean. We are rarely confident about what is to be done with innuendo, and we don’t quite know what to do with Citron’s.”<\/p>\n
Weller also noted that comparisons of Bidz’ allegedly excess inventory with companies like Blue Nile Inc. and Overstock.com Inc. are “not particularly illuminating because of very different business models.”<\/p>\n","protected":false},"excerpt":{"rendered":"
Bidz CEO Denies Citron Research Claims CNNMoney.com Bidz.com CEO Denies Claims of Shill Bidding, Excessive Inventory in Citron Research Report November 27, 2007: 07:16 PM EST NEW YORK (Associated Press) – Bidz.com Inc. Chief Executive David Zinberg late Tuesday denied several allegations in a Monday report by Citron Research, including that the company engages in […]<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[411],"tags":[],"yoast_head":"\n