They do a short go on CNN and spread some lies and the price of ZZ stock falls. They make more money, you get rid of an annoyance and you will be able to pick up some prime people at bargain basement prices when they are out of a job because their company collapses.
Even though the price of ZZ stock falls, ZZ has better products and better service and their sales keep increasing. Their profit is higher than the profit of YY Widget.
Why does the company collapse just because some guy on CNN lied about ZZ earnings or sales or whatever?
Not the way it works.
Once a company as been rumored they lose sales.
Their stock price falling means that they are no longer considered a safe or solid company to do business with.
If ZZ has a very loyal and active customer base they might carry through.
But they will be reduced and moved down the list.
Once you are down the list your parts don't arrive. You are moved to another shelf. You might even be dropped entirely from some retailers.