Palm inc. is in trouble, and most everyone knows it. It can only be a sign of the times that Palm is consideringa reverse stock splitin order to make its stock look more valuable. Typically, companies split their stocks to make them look like better deals–bargains, if you will. Hence, one $100 share becomes two $50 shares, and so on, and new investors are (in theory) attracted to the new lower price. Yeah, it may seem silly, but apparently it works. (And, I might add, in the case of markets where you can’t buy fractions of a stock, it’s nice for the small investor).
In today’s largely media-engineered economy, it’s like Bizarro world. To make its stock more appealing, Palm wants toconsolidateshares and multiply the price by at least a multiple of 10. Friday’s closing price was $1.36 a share. A one-for-10 or 20 swap would make the stock look alive (10 shares consolidating into one, $13.60 share), but are people really fooled by this stuff? I guess so. I find it odd because, no matter how it’s divvied up, P/E is still the same, as are earnings per share once you do the math.
