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Technology Stocks : PLPT: Pulsepoint Communications (previously DGSD) -- Ignore unavailable to you. Want to Upgrade?

To: TWICK who wrote (164)	1/1/1998 11:18:00 PM
From: del clark	Read Replies (2) \| Respond to of 614

A Rookie Answer, A split is when a company replaces the amount of shares you own with a new number. Microsoft shares trade in the $120 range. Eventually upon company discretion they will do a split. Say they give you 3 shares for evey one you own and the price will be changed to $40. You still own $120 worth of shares but instead of 1 share you now have 3. This makes it easier for new investors to buy into MSFT. If they didn't do this a single share of stock would cost thousands of dollars. A reverse split is just the opposite. A company gets in financial trouble and ends up with a lot of shares on the market with no way to earn enough to get in the black. It usually is a negative. Only 1 in 100 companies succeed after a reverse split. But they do succeed. In DGSD's case they have 60 million outstanding. If they give each holder 1 share for every 5 they own and adjust the price accordingly they end up with 12 million shares outstanding making it easier to make positive earnings per share. It also makes the share price higher so they do not lose listing on the Nasdaq. Usually it causes a sell off as no one wants to get screwed out of their shares of stock owned. Usually it is the begining of the end for a mismanaged company. This is the first time I have seen any stock appreciate two weeks after announcing a reverse split but then were dealing with Microsoft. Microsoft is going to have to go through the same reverse split as common shareholders and investors like myself jumped right in following Microsofts lead and bought. If Microsoft likes a company for what ever reason it should make a safe investment. After back reading the press releases I am wondering if the only ones who can make money here is Microsoft? Are the common shareholders just getting the shaft? I might add that the Dec. 19 press release stated that the 1 for 5 split was subject to shareholder approval at the next shareholder meeting. I would think that most shareholders would not approve of this reverse split if done above board. If nothing else DGSD will be an interesting stock to watch the next few weeks and further into next year. Del