Don't go calling Sun Microsystems
I know -- reverse stock splits are usually good for a chuckle or two. It's usually Plan Z for illiquid penny stocks in a last-ditch effort to seem reputable. However, not every reverse stock split is a disaster story. Stocks like Priceline.com
Sun is no slouch. The company commands a nearly $20 billion market cap. However, because it also packs 3.6 billion shares outstanding, the end result is that retail investors see a stock trading at $5-ish.
If the split is approved, investors will get one share priced four times higher for every four they own. It's a zero-sum game, but it's all about appearances here. Sun's turnaround is for real. Last week's ticker symbol change -- from SUNW to JAVA -- is no accident. The company is trying to distance itself from its chunky past, shedding its baggy share count like Jared Fogle huffing and puffing his way to Subway. It announced that it's on the prowl to snap up software companies earlier this week, and it's hard to flirt when you have to rattle off your share price like you're a toddler digging for worms in a sandbox.
"Golly, I'm five-and-a-half," isn't the best of pickup lines.
So even though I can be cynical about reverse stock splits -- and actually appreciate low-priced stocks -- I'm glad to see Sun going for the reverse here. If successful, maybe it will inspire other obvious beefy candidates like Sirius Satellite Radio
If Jared can do it, so can you!
If you can't reverse your shares, reverse the clock to revisit these related stories:
Longtime Fool contributor Rick Munarriz knows that you can't turn back time, but you can take back shares outstanding. He does not own shares in any of the companies in this story, save for TiVo. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.