Konrad, for the first time since I have been on this thread I have to disagree with both you, Jules, Paul, and others who believe we should vote against a stock split. I better make this lucid. eh?
Phycology plays an important role in the price of a stock. A stock like Berkshire Hathaway I believe is quite different than a stock like Intel.
Intel is a product company, people can touch it , feel it, and see it's effects. Berkshire is a company wich primarily owns other companies. A great company never the less, run by a brilliant man. Up until recently say the last 4 years who ever heard of it? Certaintly not the man on the streetcorner.
Intel is more and more becoming a consumer brand name company.
Small investors want to own Intel. Most small investors are not sofisticated enough to understand that a stock split doesn't do a thing to the value of the stock. Does that necessarily mean they are more or less apt to sell? I say no.
I'll give an example, Starbucks..starbucks is probably owned by more small investors, (especially in the Seattle area) then any stock. Has the stock been unusually volotile? No. Conversely the stock has remained rock steady with extremely high PE multiples for years. Why? People just simply like the coffee, and hence the stock.
Intel on the other hand has until recently, the last 2 years or so, primarily been owned by large institututions, ( Mutual Funds) . Has the stock been unusually rock steady, with a high multiple? Not until very recently. Why? People like Jeff Vinik, don't give a hoot about Intel or it's company, all they care about is next months issue of Money magazine showing them on the cover with the highest returns. So they sell and buy at any change in investor sentiment or the economy or there gut instinct. I believe it's a simple supply and demand issue. Will more people buy your product if it splits. I say Yes. When I tell a friend of mine. You gotta buy some Intel. The first thing he asks is. What's the price?
Intel should follow Microsoft's lead and split, I would actually prefer 3 for 1.
Regards, Michael
p.s. Besides I would love my shares to double or triple. :-)
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