Trufflette...you make some very good points in your posting. With respect to the institutional/mutual funds, your correct in saying that many are restricted from buying a stock under $10.
As far as preannouncing a 2 cent miss from the estimate, I'm not so sure that a preannouncement was necessary as their financial performance was really very good. The stock did not tank because of the 2 cent miss, it was due to the outlook for the company as presented by KE. (Read my postings as of yesterday. I posted some interesting articles...one to read came from Reuters.)
Now that the stock is trading below 10 dollars, IOM "may have" to consider a reverse split. This would halve the number of shares and double the price. However, IMO, the chances of this happening are nill. When the presplit announcement was made with the stock trading in the mid twenties range, I said they are doing the wrong thing.
I think the stock is "dead" for the next two quarters. The analysts will want to see the results of the 100 million dollar adv. campaign, their ability to launch the new products during this quarter, the further impact of Asia, ability to continue to grow revenue and profits, the impact of growing competition, and the effectiveness of their efforts in cleaning up the parts shortages. If the preceeding goals aren't successfully achieved, IOM will be trading as a 2 dollar stock.
What gets me is that KE sells his stock last year while planning on splitting the shares, knowing the full impact of increasing their OEM sales, etc, etc, He sure took care of himself, and I suspect his staff...shareholders be dammed.
By the way, the increase in shares from the split were to be used, in part, for employee stock options and purchase plans. I guess the employees got screwed along with the rest of the shareholders. Wondering if there are grounds for a shareholder class action law suit? Any lawyers on this thread? Care to comment?
I bought into IOM knowing that it was a risky investment. Now I consider IOM a very, very risky investment.
So what am I going to do with my IOM stock? Well, I'm going to stay long. At this time, and for the next few months, I think the downside risk is minimal. If things don't work out as planned by IOM, I think we will see the stock tanking in the March timeframe.
Good luck...
Stock Bull |
