I already explain this to LB's post.
We all know that LU and CSCO will compete head to head in the market, if we assume all the boundary conditions are the same for LU and CSCO, i.e the market, the product line, the sale force , the R&D capability ..etc, LU and CSCO should have the same confidence level about the future of their respective company. Now, LU and CSCO all hit their historical price where the stock should split, LU announced the split while CSCO hold it . Why ? Because CSCO's manager team is not so sure if
they will win the war , i.e continuous growth of the past . If the next earning prove that CSCO is a loser , then the stock will tank big time after the split and earning, because the stock price will drop faster after split . So CSCO decide not to split.
On the contrary, LU decided to split on April 1st, and if the earning on April 22nd showed continuous strong growth , the stock price will climb even faster , that is why I said split or not is a test of confidence level of both CSCO and LU's manager team.
As an investor , will you choose the future loser or winner ? That is another reason I said split or not split at this stock price level will have a major impact on the decision of investors , and as a result the stock price of the next couple of months. |
