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Microcap & Penny Stocks : Zulu-tek, Inc. (ZULU)
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To: Jon Tara who wrote (7573)5/27/1998 10:29:00 AM
From: BlueFox  Read Replies (3) of 18444
 
Something stinks with this split. The price of ESVS did not drop in half this morning.

They didn't call it a split, they called it a dividend (notice too the wording - a one-for-one stock dividend - not the usual 2-for-1 split wording). That would appear to mean that they're giving each shareholder one stock for each they hold from the company's holdings?

My concern is why the dividend? Dividends are usually announced after a profit, and normally aren't distributed when the company could be using the money for expansion. Distributing stock on the other hand could be viewed as a "free" way of giving something to shareholders. Time will tell if people feel the company is worth $5+ a share with twice as many shares on the market, half of which no one paid for. At this point based on this morning's slight fall, the gamble may pay off as they've doubled the number AND the value of the shares outstanding.

The cynic in me wonders if they're trying to pull a fast one and with a quick way to double the company's value on the market. The optimist says this will be good in the long run if ESVS holds its value.

"It is the company's desire to broaden its stockholder base and elicit more coverage in the investment community prior to the proposed business combination with Zulu-Tek Inc. (ZULU - news)," said Robert Smith, chief financial officer, in a statement. Anyone for speculation on what this really means?

BF
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