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Diedrich Coffee Lays Stock Jump to Bad Rumor

November 04, 1998|Leslie Earnest

Diedrich Coffee Inc. shares jumped 20% Tuesday because of what the company said was an unfounded Internet rumor.

The jump apparently was triggered by a comment on an Internet message board that said the Irvine-based coffee retailer might soon sign a second franchising contract agreement. "The Internet is wonderful, but it also does crazy things sometimes," said Diedrich spokeswoman Ann Wride.

The heavy volume prompted a call from Nasdaq officials and Wride said she informed them that the company had no news to report.

Diedrich shares closed Tuesday at $5.25, up 88 cents, with 122,800 shares trading hands, more than five times the three-month daily average.

In September, Diedrich's stock surged 17.6% after the company announced plans to open 44 coffeehouses in North Carolina over the next five years. Diedrich said that agreement was the first step in a plan to open 1,500 coffeehouses nationwide, largely through agreements with major franchise operators.

Analyst Eric Wold with Van Kasper & Co. said Diedrich is continuing to talk to franchise groups and plans to sign 17 to 20 more agreements over the next 18 months.

"I estimate that they are going to sign two contracts in this quarter," he said. "But whether or not one's going to come in the next couple days, I have no idea."

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