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Software Maker Sues Online Critics

April 7, 1999

SANFORD, Fla. (AP) _ A software maker is suing seven unidentified people who wrote critical comments about the company on an Internet message board.

Phoenix International Ltd. claims the rumors on the message board operated by Yahoo! Inc. defamed the company and caused its stock price to dip.

The lawsuit was filed March 19 in state circuit court at the Seminole County Courthouse.

Phoenix has issued subpoenas for Yahoo! records, demanding that the company disclose the names of the chat-room participants. Bahram Yusefzadeh, the company’s chairman and chief executive, said Yahoo! was cooperating fully, although the individuals haven’t yet been identified.

Some of the messages, many of which are critical of Yusefzadeh, appear to be employees and former employees, the chairman said Tuesday.

Someone using the moniker ``johnboscarelli″ posted messages on Feb. 9 and 16 that said, ``not a single ex-manager from the company is on speaking terms with this Yusefzadeh character″ and ``the CEO isn’t too sharp technically, has a huge ego and has a well-earned reputation for dealing dishonestly with his managers and business partners.″

During the past 2 1/2 months, senior company officials have spent ``enormous amounts of time″ defending the company from negative rumors, Yusefzadeh said.

``Some people have put this company under siege for some of the garbage put on this Yahoo! chatboard,″ he said.

Phoenix makes software for the financial-services industry. Its stock traded this week for nearly $5, down from a 52-week high of $21.68.

Yusefzadeh owns about 1.4 million shares of the company, meaning his stake in Phoenix has dropped in value from $31 million to $7 million during the past year.

Robert V. Bolen, an analyst with J.C. Bradford & Co. in Nashville, Tenn., said the negative chat had damaged the company.

The stock lost one-third of its value on Jan. 13, when the company announced its fourth-quarter earnings would be 9 cents a share, less than half of the 20-cent projection.

But the stock has continued to slide since then, and there has been no other reasonable explanation, Bolen said.

The other defendants go under the monikers ``readbetweenthelines,″ ``numbersguy_2000,″ ``PHXX_Loser,″ ``EmployedThere,″ ``banker9999″ and ``Phoenix_Employee.″

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