Throw Mamma From the Train

Tell me if you think this smells funny. One day after shares of online metasearch specialist Mamma.com (Nasdaq: MAMA) soared on buyout rumors, the company's auditor refuses to back the company's financials and Mamma.com is forced to delay the filing of its 2004 results, possibly beyond next month's deadline.

Tuesday saw a 36% pop before yesterday's 32% slide. Do you think that the Securities and Exchange Commission might want to look into some of those trades to see whether anyone manipulated the rumor mill, knowing the debacle that would take place the morning after? Profiting from both ends of the candle, illegally, is definitely worth a look; especially since the SEC is already looking at some of the stock's ridiculous price gyrations from last year.

Even before it becomes fiscally official, 2004 was a wild year for Mamma. Maverick investor Mark Cuban bought in early in the year. Then he cashed out a couple of months later under a lightweight excuse, claiming he was upset that Mamma was growing through acquisitions. None of the portals is growing strictly organically, folks.

I have no reason to doubt that Cuban is clean. He's got too much money riding elsewhere to play games with what was a relatively small investment in Mamma. Yet his name attached to the stock, along with its puny float and the company's lack of Wall Street coverage and earnings guidance, made for some wild mood swings over the past year.

It's a shame, because online search is huge. Just ask Google (Nasdaq: GOOG) and Yahoo! (Nasdaq: YHOO). Even smaller players like Ask Jeeves (Nasdaq: ASKJ) and FindWhat.com (Nasdaq: FWHT) are thriving. That's why few have bothered to question Mamma's reported profitability. Yet that's always the first query that comes up when a company's bean counter is running the other way.

As a pure play on the popularity of paid search, Mamma needs to come out of this episode with clean hands to truly cash in on the sector's favorable momentum. Otherwise, the company that bills itself as the mother of all search engines is going to produce the mother of all headaches.

Want Mamma to read you some more bedtime stories?

• Read all about Mark Cuban's Mamma.
• There are concerns about the company's share dilution.
• A lot of concerns about that dilution, actually.

Longtime Fool contributor Rick Munarriz loves his mamma -- but not Mamma.com. He does not own shares in any of the companies mentioned in this story. The Fool has a disclosure policy. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.