News just out -- What is the reason for a reverse split? What is the likely invester reaction to this announcement?
New member. First post.
JimTrim
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US Dataworks, Inc. Announces Reverse Stock Split Friday September 26, 7:00 am ET
HOUSTON, Texas, Sept. 26 /PRNewswire-FirstCall/ -- US Dataworks, Inc. (Amex: UDW - News) announced today that its Board of Directors has declared a one- for-five reverse stock split of the Company's issued and outstanding common stock. Every five shares of common stock shall be combined into one share of common stock, while retaining 90 million shares of authorized common stock (unchanged par value). The effective date of the reverse stock split is September 29, 2003.
Posted by Jeremy on :
A reverse split is a stock split which reduces the number of outstanding shares and increases the per-share price proportionately. This is usually an attempt by a company to disguise a falling stock price, since the actual market capitalization of the stock does not change at all. For example, if a company declares a one-for-ten reverese split, then a person who previously held 20 shares valued by the market at $1 each will then have 2 shares worth $10 each. Many stock exchanges in the U.S. do not allow companies with a stock price of less than $1 to remain listed, and many such companies then have to undertake reverse splits if they want to remain listed.
[This message has been edited by Jeremy (edited September 26, 2003).]
Posted by metal1 on :
yes, i would guess they did it to keep their AMEX listing
Posted by banquerero on :
UDW looks like it may start moving again.
(it is in fact). The r/s and float dilution by the private placement (which reduced debt) may not have been all that unfavorable after all. The "Check 21" law will have a strong favorable effect on UDW
R/S doesn't always mean doom/gloom.
Basically, they are trying to bring the pps within sights of the fund managers (who ignore pps below $5).
Look at INSP as a success example (split 1:10 13-Sep-02).