Conexant Systems Inc. (NASDAQ: CNXT) is going to try a reverse stock split to juice its shares. As the stock trades 6 million shares per day and is at the very lowest-end of its $0.55 to $2.09 trading range over the last year, it is of little surprise that the company will try this. Conexant was literally a $100+ stock at one time back in the tech bubble days.
In a filing, the company said that shareholders at the annual shareholders meeting approved a proposal that would allow for a reverse stock split for a period of up to one year. The company has also noted that John Marren, who came over from the old GlobespanVirata days, has resigned from the board in conjunction with its annual shareholders meeting.
This is one we have covered with caution in our weekly “10 Stocks Under $10” letter for quite some time. The company is outside of listing requirements over its minimum price, making this even less of a surprise. Other companies that have pursued reverse stock splits in recent times have been tech companies such as Sun Microsystems, JDS Uniphase, Nortel, and others. You can ask around about the opinions of a reverse stock split, but you’ll find more indifference than anything.
Jon C. Ogg
February 22, 2008
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