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WavePhore blames TV show for stock drop

WavePhore says it has contacted the SEC and Nasdaq to investigate what it contends are damaging comments made on CNBC TV by a guest host.

WavePhore said it has contacted the Securities and Exchange Commission and the Nasdaq stock market to investigate what it contends are damaging comments made on CNBC television by a guest host about the Web broadcaster of news, advertisements, and other Internet programming.

The company contends that its stock plummeted after an appearance by commentator James Cramer. Cramer, who is a hedge fund manager with Cramer, Berkowitz & Company, allegedly made statements characterizing certain Internet firms as "Fraud-U-Net" companies and said that "[Federal Reserve chairman Alan] Greenspan doesn't like WavePhore going up."

The company also asserts that Cramer allegedly tried to "short" WavePhore stock prior to the interview.

"The company has a clear responsibility to respond to the statements directed at WavePhore in connection with an interview with our chairman, president, and CEO, David Deeds," WavePhore chief operating officer Glenn Williamson said in a statement. "We believe that the statements by the guest host, James Cramer, by his own admission, did not reflect full knowledge and understanding of our business."

But Cramer defended his comments in his column today on "I did not short WavePhore or any other Net stock. That's not the point at all. The point is silliness vs. no silliness, losses vs. no losses," Cramer wrote. "I have been the Net's most public supporter. But the whole Net as an investment thesis will get out of hand if, every time a Net stock is mentioned on CNBC, it doubles."

Shares of WavePhore rocketed skyward on Tuesday after the data broadcasting company announced the launch of a new "broadcast mall." WavePhore stock climbed 96.77 percent or 7.5 points to 15.25. The company's shares have traded as high as 19.13 and as low as 3.25 during the past 52 weeks.

The company added that since the interview aired Wednesday morning, its stock has fallen significantly. Shares of WavePhore fell to close at 7.94 yesterday.

CNBC could not be reached for comment.

Microsoft has accumulated a 2.88 percent stake in WavePhore. The software giant bought into its partner without the knowledge of WavePhore management. Microsoft bought 500,000 shares in November 1997, making the company, along with Intel which also owns 500,000 shares, the second-largest shareholder in WavePhore, Williamson said earlier this year.