Now Corp. to sue DICT chief for massive drop in stock value

Publicly-listed firm Now Corp. said it is planning to file charges against Department of Information and Communication and Technology (DICT) acting secretary Eliseo Rio Jr. for his alleged “reckless” statement that caused the free fall of the company’s shares.

DICT acting secretary Eliseo M. Rio Jr.

Miguel Lopez, Now Corp. head of investor relations, said the company’s lawyers are now studying possible legal recourses. “Now Corp. has assigned its lawyers to study the damages of the reckless statements and the immediate filing of cases,” the company said in a statement.

He pointed out Rio’s statement naming Now Corp. – with only P6.3 million net income in 2017 – as the mother company of Now Telecom is “false and a malicious lie.”

“Now Telecom is only an affiliate of Now Corp.,” he said. Now Corp. has only 19% ownership stake in Now Telecom.

Lopez said the reckless statements of Rio damaged the value of Now Corp. shares in the market and caused the loss of about P7 billion in market capitalization.

In his statement reported by various media entities and posted on the DICT’s website, Rio said Now Telecom probably cannot afford to bid for the right to be the country’s third major telco.

“The participation fee of P1 million it paid may have significantly cost Now Telecom’s mother company, Now Corp., of its operational income which only stood at P6.3 million in 2017,” Rio was quoted as saying in various media reports.

Share prices of Now Corp. dropped sharply by 52% on October 10 after Rio’s statements were published in various media outlets. As of October 12, the company’s share prices has dropped by 25.10% from P7.49 to P5.61.

Lopez noted that Rio’s statement “effectively questioned Now Corp.’s financial capacity with his quip on our net income at P6.3 million in 2017.”

“He short of accused that Now Corp. – which he claimed as the mother company of Now Telecom – has no capacity to provide financial assistance. He also insinuated that the so-called lack of funding was the reason why Now Telecom filed a case in the Manila Regional Trial Court. These are outright lies,” the company said.

“Mr. Rio achieved his objective. He made Now Corp. owners P7 billion poorer because of his reckless and unethical utterances which triggered the sudden decline in the company’s stock prices last October 10 and 11.

It wiped out a significant part of Now Corp.’s market capitalization in a matter of days,” Lopez said.

He also claimed that when Rio talked about Now Corp.’s P6.3 million net income, he failed to mention that Now Corp. – being a publicly listed company – has a market capitalization of P11 billion.

“Besides, net income is not the appropriate metric when valuing tech firms; in fact, Apple and Amazon consistently posted negative net income for many years until they reached trillion dollar valuations,” Lopez said.

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