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Microsoft Corporation Message Board

  • rama9998 rama9998 Dec 8, 1997 1:27 PM Flag

    MSFT Split..

    Does anybody have any Idea when MSFT would split in future ?

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    • Hi,

      From general observations,
      I see three reasons to split a stock:
      1. Lower the stock price.
      2. Raise more money.
      3. Offset bad news.

      Last year the stock split and rushed right back up
      to a high price and a very high PE ratio. Why split
      it again? Does Microsoft need more cash? The stock
      price seemed to be in a holding pattern for the last
      six months, but seems to be moving back up. If the
      stock starts falling for some reason, MSFT just needs
      to announce a split and drive the stock price back up.

      Just before the last slipt I heard rumors that the split
      was impending were being circulated. I wish I listed to
      them as I sold off some stock just before the split. I
      thought the sell off of Oct 1997 would occur in 1996.


      • 2 Replies to KevinInCA
      • Mommy, does the PE of a stock get lower when a stock splits? Does it huh?

        Gee golly no Bobby. You see the amount of money the company makes per share, which is called its earnings per share, is also changed so the PE stays the same. Don't you know?

        Uh, what's a PE again Mommy?

        Now come on Mr. Mansy wash your hands. It's gee golly almost time for supper.

      • Correction: A stock split DOES NOT raise more money for the issuer of the stock. The price is adjusted for the additional shares outstanding after the split. The total capitalization does not change.

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