notime
thanks for reply
using $5.62 SH for a stock with 8 million OS and 3 million net profit. Let's say you own 5000 shares so your worth is $28,100
Let's assume PBLS has 800 million OS with 3 million net profit for all of its divisions, that would come to .056 as a reasonable share price based on the prior example. Let's say you own 500000, you value would be the same as above.
Now, let's say the company has tried its best to retire shares and was not very successful and decides to do a reverse split. Let's assume also the company knows that quarter to quarter revenues for the next 3 years will increase steadily and dramatically. So it decides to do the unprecedented : a reverse split of 100 to 1!
Consequently, PBLS now has 8 million OS shares with 3 million net profit and a price of $5.62 at the time of the split. You now have 5000 shares instead of 500,000 and your value is the same $28,100 at the time of the split.
Now the quarter closes two months later and PBLS reports the beginning of the steadly increasing profits so that by the the end of calendar year 2008 PBLS reports a net profit of 12 million. Using your figures, the price should rise to 4 times or $22.48 and your stock is now valued at $112,400 (5000 shares x $22.48)
My point is that a reverse split would be beneficial since it would reduce the 800 million and with revenues increasing to 12 million under favorable economic conditions would dramatically affect the SP. Also the company could then go to a brokerge house and offer shares for sale for future acquistions w/o great dilution since 8 million shares were OS. They could offer to sell 20 million shares at say $15 a share and raise $300 million dollars .
Is this conceivable?
AI
