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Biotech / Medical : URMD -- Huge market potential -- Ignore unavailable to you. Want to Upgrade?

To: Ms. Baby Boomer who wrote (230)	3/26/1998 11:24:00 AM
From: Bosco	Read Replies (1) \| Respond to of 369

Dear Maria - there are several reasons. 1. why do you think there is dilution to begin with? A corporation is governed by its bylaws of how many shares it can issue. If let say URMD hit that ceiling, it won't be able to do it anymore unless the many of shares outstanding is reduced. A reverse split is such mechanism - to allow a corporation to continue printing stock as currency. I am not saying URMD is doing it for that reason this time around, but we really don't know why mgt doing that - and have to take their words at face value. If so, mgt is not too bullish with the stk, is it? 2. Too many shares is not really the issue. The mkt cap is. Otherwise, why would people love those stock split? 3. From experience, reverse split tend to devalue the stock after the commencement of reversal. If the stock is a short seller favorite, they ve more incentive to short the stock again after the reversal. Of course, there are exceptions, but not too many 4. following the logic of #2 and #3, has anyone heard about MSFT or AOL doing a reverse split? 5. Reverse split does not in anyway enhance shareholder values. The only way is to initiate a buyback and retire the stock to treasury. Having said that, I think there is a chance URMD may go a bit higher in the near term - after the initial disappointment [The current price is some sort of indication that I am not the only one seeing it as negative news.] Becareful of that happens, the big boys are making an exit strategy. I ve already placed a GTC order to get out. I don't think people to run for the exit and let the MMs have a field day, but it is worthwhile to analyze the situation as it is presented. If one has a deep faith, maybe one can stick to it - come hell and hi-water. OTOH, URMD behaves so poorly even after a Montgomery upgrade - we don't need mgt to make this kind of decision that may hurt existing shareholders in a major way. rgds Bosco