Now Nortel Goes For A Reverse Split

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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.

2 Comments

mmcintosh

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.

Jesse Kopelman

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.

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