[geeks] Article: Sun's not so cheap trick doesn't work

[Lionel Peterson]

> -----Original Message-----
> From: geeks-bounces at sunhelp.org [mailto:geeks-bounces at sunhelp.org] On
> Behalf Of nate at portents.com
> Sent: Friday, October 10, 2008 12:41 PM
> To: The Geeks List
> Subject: [geeks] Article: Sun's not so cheap trick doesn't work
> 
> What do you folks think of this?
> 
> http://www.theregister.co.uk/2008/10/10/sun_stock_price_falls_lower/

The reverse stock split (4 shares become 1) was an obvious "cheap trick" -
and the reasons given were asinine, IMHO (but then again, I've always
thought such things were geared towards less sophisticated traders).

The reasons given are silly:

1) To make the share price "look like" that of our competitors

2) Reduce per-share transaction costs for fixed-dollar investors

3) To make revenue per share more "visible" (i.e. appear four times larger)

I wish the article went beyond the share price issue and looked at the
fundamentals of the company - isn't it possible there are simply too many
shares out there? You can't compare companies on a per-share price/revenue
basis, as each company has wildly different numbers of shares. (Sun has 744M
shares)

As an aside, Berkshire Hathaway refuses to split their stock, which was,
last time I checked, trading at around $112K per share[0] and their EPS is
over $7K - there are 1.55M shares of Berkshire Hathaway...

If Sun had 1.55 Million shares, it's per-share price would be about $2,300,
but to get there would require a staggering 500 to 1 reverse stock split.
;^)

Lionel

[0] http://finance.google.com/finance?tkr=1&q=NYSE:BRK.A