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Technology Stocks : PLPT: Pulsepoint Communications (previously DGSD)
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To: Mike Winn who wrote (166)1/2/1998 5:21:00 AM
From: del clark  Read Replies (1) of 614
 
Mike,
Of course Splits are psychological. Would you buy Microsoft if it cost you $49,000 a share? Would you be able to sell the 100 shares of Microsoft you purchased in 1986 at $49,000 a share? I don't think so. Therefore your shares wouldn't be worth $490,000. The psycological effect can and does have more effect on the price than the strict bottom line numbers. The market couldn't survive without P factor.

As for DGSD. I don't think it would hold at 8.75 after a split. (At least without the Microsoft connection). Normally the stock would tank just prior and continue tanking after the split. Forget bottom line numbers and P/E ratios. The P factor rules in a reverse split. Unless something dramatic happened to change the outlook for the company a reverse will destroy the company. That is where I think Microsoft could change this. The price movement tuesday and wednesday indicates there is something unusual about this one. Maybe some more news comming.

My question is the Dec. 19 press release giving Microsoft an option of 10 common shares for every one prefered. Did I read this correctly?
It sounded like Microsoft has the right to excersise this option immediatly. Am I wrong? If the price tanks after a reverse split Microsoft is still making a killing on DGSD and it's shareholders. Then again it might not tank with Microsofts involvement.

Del
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