December 12, 2000, 1:26 PM —
IT'S AN EXECUTIVE'S worst nightmare -- an early morning phone call bringing heart-
stopping news. Ron Quagliara, CTO and senior vice president of research and development
of Emulex, a Costa Mesa, Calif.-based Fibre Channel equipment vendor, got such a call
on Aug. 25 and emerged a hero after taking quick action to help diffuse an exploding
A press release had gone out over a news wire at 6:30 a.m. Pacific -- timed for the
stock market's opening bell. The release announced that Emulex's CEO had resigned, the
company was under investigation by the Securities and Exchange Commission, and that the
company's earnings would be restated to reflect a loss instead of record profits. It
was a crisis in the making; yet none of it was true.
The bogus release, issued by Internet Wire, was reported by Bloomberg and several
other news organizations. The company's stock price plunged from $110 a share to $43 on
the NASDAQ market in a matter of minutes.
On the West Coast and en route to a trade conference, Quagliara was alerted to the
news via a series of phone calls from professional associates. He tracked down Emulex
CEO Paul Folino via cell phone. The CEO was also on the road and he was oblivious to
what was going on. After being assured that Folino was, in fact, still on board,
Quagliara suggested that Folino contact NASDAQ immediately and halt trading in the
That done, Folino soon appeared on CNBC to assure investors that the press release
was a hoax; Emulex's stock quickly recovered most of its losses. A former Internet Wire
employee , Mark Jakob, had allegedly perpetrated the hoax and pocketed around $241,000
short-selling Emulex shares that day. Jakob now faces charges and is scheduled to go on
trial Nov. 21, in Los Angeles.
Without Quagliara's prompt and decisive reactions, the results could have been
disastrous. "We had to move very, very quickly," says Quagliara. "We were fortunate
that the news was easy to disprove. It made it easy for Paul to go live and dispute
As the increasingly strategic bottom-line duties of IT professionals make them
highly visible in and outside the enterprise, they must play an integral role in crisis
planning and crisis management. Tech professionals can make important contributions to
the crisis management process not only by being keenly aware of what's happening in the
business world -- as Quagliara was that fateful day -- but also by lending technical
expertise to decisions about how the corporate Web site, contact databases, and e-mail
can bee used in managing a crisis.