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Technology Stocks : Lucent Technologies (LU)
LU 3.120+11.4%3:59 PM EDT
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To: David C. Burns who wrote (21835)1/20/2006 3:12:37 PM
From: MJ  Read Replies (1) of 21876
 
Lucent is in the same position that numerous stocks are that played the Wall Street game in the days of their early growth.

As long as the company was growing or perceived to be growing new stock was issued via regular splits of 2 for 1 or 3 for 1 generally.

That meant that the companies grew from millions of shares outstanding to billions of shares.

So when the capitalization becomes so big, as the early Egyptians noted with numbers they couldn't describe that were large, there is the oh my gosh reaction. Too many shares and we can't show a profit based on these billions of shares.

Interestingly, LU does have a profit per share. So why are the institutions saying not investment grade??

So now we are on the other side of the coin---------first regular splits and now the reverse splits.

For reverse splits to work, imo, a company must have a possibility of profits and future growth. Does Lucent have that as they did when they started years ago?

mj
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