First it was Ciena, and now Nortel is doing a reverse split, hoping to add some respectability to their stock price. The beleaguered telecom equipment maker which has been constantly resetting itself since the telecom bust, is going for 1-for-10 reverse split. The current share price is about $2.15, and after the split, the price will be $21.50 a share. The total share count will decline from around 4.34 billion to about 505 million shares.
“While nothing changes from a structural point-of-view, our analysis of companies who have recently completed a reverse stock-split suggests that the average share-price may decline up to 8% during the first-week,” RBC Capital Markets analyst Mark Sue wrote in a note this morning to his client. Never mind all the splits — this is window dressing, and the company problems still continue, though some analysts are forecasting a 5%-to-7% increase in fourth quarter 2006 revenues.
I still remember the quarter they lost $20B! Nortel is Canada’s version of Worldcom or Tyco. That nobody ever went to jail shows that the Canucks aren’t as enlightened as we give them credit for.
The only people to gain anything from the split is Nortel As a small shareholder of only 31 shares now originally 310 worth 2.50 $775.00 now the proud owner of only 31 shares @6.20 $192.20 Does one need to ask who profits? These old shares have already lost thousands since the original purchase. Pretty soon you will have it all The poorest investment I have ever seen.One would sure hope something can be done to turn this around.