A well-crafted bogus press release sends Emulex shares plummeting 62 percent in one day, costing investors approximately $110 million in losses.
A private e-mail exchange between an attorney and his girlfriend spreads across international message boards and online publications, tainting the firm's image before it was deemed a hoax.
These cases are but two of many hoaxes and false reports on the Web that can tarnish reputations and/or send stock prices tumbling within minutes of their release.
That's why companies are turning to a new breed of highly automated Internet clipping or monitoring services to track what's being said about them.
"Buying an Internet monitoring service is like buying fire insurance," said Nancy Sells, vice president of eWatch services. "(Companies) don't want to be the last to know."
Clipping services have been around for some time. But unlike their print counterparts, Web-clipping services offer almost immediate results and broader use.
"Buzz does start on the Internet and then migrates to traditional mass-media," William Comcowich, president and CEO of CyberAlert.
"Many companies started using (Web-clipping firms) the way they have used traditional clipping services for decades, to track their own press releases," Comcowich said. "But they quickly found that you can use the service for much more."
Investors, attorneys, nonprofits and government officials are using these services to monitor employee or consumer sentiment, follow investment boards, track their competitors and prevent trademark infringement.
Web-clipping services like Cyber Scan, CyberAlert, CyberClipping, WebClipping.com and eWatch scour the vast landscape of online publications, Usenet groups and e-mail discussion lists for any mention of a company or phrase.
Another site, NetCurrents (NTCS), goes beyond mere searching and clipping to offer real-time reporting and strategic analysis for firms to counter negative postings or articles.
"The real-time aspect focuses on the need for publicly traded companies to manage rumors or misinformation," said Rebecca Callahan, vice president of sales and marketing for NetCurrents.
NetCurrents provides real-time alerts from message-board postings, articles and newsgroups. A team of analysts conducts activity reports and makes recommendations. After an inaccurate posting is identified, an analyst checks the facts and removes messages or posts corrections if necessary.
"There's too much discussion for individual companies to get a handle on that on their own," Callahan said. "(A client) would physically have to go to every message board to get the pulse of what's being said about them."
While NetCurrents offers clients analysis and suggestions for recourse, others believe that clients are better off taking action against negative postings on their own.
"We believe that the company or their PR agency is in a much better position to analyze themselves," said CyberAlert's Comcowich.
Instead of providing strategic analysis for clients, eWatch refers them to Internet Crimes Group, a licensed Internet detective agency.
"We deliver the information to the customer," Sells said. "It's up to them to do what they see fit. We don't take a stance, intervene or do anything else.... Our customers don't want us to do that for them."
With a glut of chat rooms, Web pages, audio files and e-mail newsletters spreading messages, critics say that these services aren't always as effective as they claim to be.
"It is impossible to clip or monitor the Internet, because the Internet is not one thing, like a TV channel or radio station or magazine," said Eric Ward, creator of NetPOST, a company providing personalized linking and website awareness building campaigns.
The accuracy of any Internet monitoring service depends upon the area being tracked, Ward said.
"Nothing can track all of them because to do that would mean tracking billions of areas, some of which aren't trackable in the first place.... No tracking service can make any accurate claims about percentages tracked."
What's more, news bots cannot determine intent. So automated results may not be able to distinguish between wanted and unwanted clips.
Although these services may not be a panacea, proponents insist that they do help weed out irrelevant information.
"We don't monitor the entire Internet," Sells said. "You can't and you don't want to.... We monitor content that is important to our customer."
While Internet monitoring firms can't always prevent crises like the Emulex hoax, they can provide an early warning to companies that want to quash rumors or false reports before they spread, delivering results via e-mail or the Web.
"A monitoring service can't prevent that from happening," Sells said. "It can't prevent people from saying things, but it can help you see the trends."
These services can be costly. NetCurrents charges anywhere between $1,500 to $7,500 per month for its services, which include everything from basic alert notifications to emergency task force services, strategic information dissemination and competitive intelligence reports.
On the cheaper side, CyberAlert costs $395 per month per search string, with no additional per-clip fee. CyberScan's costs range from $200 per month to $1,375 per month, depending on how many services are selected.
While most of these sites are expensive, others like Excite's News Tracker offer many of the same services for free.
"In many instances a company can glean what they need without paying absurd fees to services that ultimately miss more than they find," Ward said.
Critics worry that Internet monitoring may quell free speech by discouraging anonymous postings from employees and consumers who are being watched. But others say that these services won't deter online discussion.
"I think we'll see damaging stories are going to diminish," Sells said. "But (Internet monitoring) isn't going to diminish people from going out and talking."
Despite their shortcomings, proponents believe that Internet monitoring services are crucial for businesses in the new economy.
"We believe that information retrieval is going to be one of the critical business tools of the future," Comcowich said.
