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Southwall Technologies Inc. Message Board

  • herenowhereandnow herenowhereandnow May 12, 2010 11:02 PM Flag

    so much for reverse splits being bad


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    • Who said reverse splits are bad?

      Reverse splits make it more difficult to accumulate a company's shares and make it more attractive for people to sell their shares (at least in their mind).

      Regular splits make it easier to accumulate a company's shares and make it more attractive to buy them.

      Is it clear which one is designed to facilitate accumulation and which one is designed to facilitate the opposite?

      Reverse splits take place AFTER a period of poor performance in general (JMHO).


      • 1 Reply to alexalekhine
      • Alex, before offering my two cents on the reverse split I want to compliment you on your analysis of the company, always thoughtful and appreciated.

        Stock splits are essentially neutral events they
        do not give a shareholder any or any less ownership in a company. Reverse splits are viewed negatively because financial results, as you point out, are in decline and companies that pursue this course are attempting to prop up their stock price and retain exchange listing. This rarely works the price decline generally continues.

        In SWTX's case operational performance is vastly improved over past years. Reverse split in this instance can be quite positive. There are to many shares outstanding, given operational levels, due to the Needham bailout. By raising the stock price and most importantly achieve NASDAQ listing, this will open up whole new set of investors who by charter or practice cannot invest in low price over the counter stocks. If performance continues to improve this should have a positive effect on the stock price