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Rule number one of damage control is, or at least should be, "First do no harm."

After Bidz.com (NASDAQ: BIDZ) found itself on the receiving end of a scathing research report from Citron Research, the company's management decided it had to do something. The stock plunged in the wake of Citron post: -- falling 28.2% Tuesday in addition to a steep drop on Monday. After hitting an all-time high of $22.50 on Monday, the stock closed Tuesday at $11.89.

The conference call that was presumably supposed to stop the bleeding failed miserably: the stock traded down another 21% after hours.

What's all the fuss about? Well Citron Research alleges that "Bidz.com's business model is not sustainable. The large related party transactions, and the background of the individuals involved certainly provide plenty of reason for doubt. It is the opinion of Citron that the recent surge in stock price is completely unwarranted and the company is going to have to start generating real cash under a verifiable and transparent inventory valuation discipline before shareholders can take its earnings seriously."

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Bidz.com conference call goes a little off kilter originally appeared on BloggingStocks on Wed, 28 Nov 2007 16:18:00 EST. Please see our terms for use of feeds.

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