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Technology Stocks : America On-Line (AOL) -- Ignore unavailable to you. Want to Upgrade?

To: KailuaBoy who wrote (32407)	10/7/1999 6:36:00 PM
From: FlameMe	Read Replies (1) \| Respond to of 41369

OK. I think I understand your question. You are right about Scenario 2, a stock split only gives more shares to the shareholders. It has nothing to do with a deal. Under Scenario 1, if they issued new stock and bought a company with it, then yes, you would now own a smaller percentage of the company because there are more outstanding shares. However, the company should be worth a lot more because they just bought a company with all their assets, etc. Not sure if this answers it or not :-) Regards, Ross

To: KailuaBoy who wrote (32407)	10/7/1999 6:37:00 PM
From: JayPC	Respond to of 41369

So AOL issues 4.2 Billion new shares of stock. Now they have stock to do a deal. What happens to the value of your shares of AOL when they don't split but rather are now in a pool of 6 billion instead of 1.8 billion? You get fewer dollars when you sell each share. Theoritically if you spend 42 Billion in share capital to aquire a company, you add 42 Billion to the company's worth. The immediate net effect is neutral.. theoretically AOL decides not to issue new shares but rather split the outstanding shares into thirds thereby increasing the number of shares to 6 billion. How does that give them "more shares" with which to do a deal? Are you gonna give them one of your shares back when they split them into thirds? It doesn't give them more shares to make a deal. It gives you more shares. Jay