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.