The company should not let a few traders to manipulate the stock this way. Shareholders lost about 10% in two days without any news. Matrix Research upgraded the stock to STRONG BUY today but no one saw it.
The company has responsibility to protect its shareholders. The company must release a statement and explain if anything has changed in past two days. If not then this was a manipulation.
Share buy back will prevent extreme manipulation like today. Although the company may not buy any shares but always has option to do so if the stock price drops significantly low without any change in fundamentals.
OmniVision Technologies Inc. (OVTI), a tech company was facing exact scenario a few months ago when the shorts were all over the stock. Its institutions ownership was over 150% with 50% of shares were shorted. With plenty of cash, OVTI was refusing to announce share buy back. Shorts had an upper hand and eventually pushed the stock to low $11 with help of some crook analysts.
Eventually, the company realized that it should stand for shareholders and defend the stock and the company against hedge funds and crook manipulators. It announced share buy back, although it never bought back any share. However, the stock gained more than 120% in a few months.
ACTU did the same and actually bought back some shares each quarter. ACTU gained 300% in 2 years. Recently, most companies from CSCO to SUN micro, WAG and others are buying back their shares. It is a good investment, give shareholders confidence and prevent ridiculous manipulation. If management believes in its company, it should add this proven basic strategy. Some companies borrow money to buy back their shares.
If a company management is not bother with these strategies then it should go private to save their time dealing with public.
I found this few months old comment. Could the pps be reacting to a possible generic that could ge announced in early .08
19-Jun-07 08:26 ET In Play Salix Pharm: FBR presents three hypothetical scenarios for Colazal (12.63 ) : Friedman Billings says the threat of generic competition for Colazal continues to suppress the valuation of the SLXP. Firm analyzed three potential scenarios for Colazal including no generic competition and two scenarios where generic competition enters the market in Jan 2008 or in Jan 2009. Generic competition in Jan 2008 would result in trough EPS earnings of $0.15 and result in a share price of $8 to $10. Generic competition in Jan 2009 results in esti trough earnings of $0.79 in 2009 and a share price of $12 using the current multiple of 15 times. Firm believes the entry of generic competition within the next 6-12 months would lead to a share price decline to $8-$10, which would be a compelling buying opportunity.