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SCO Stock In Danger of Delisting, Again

Posted by ryuzaki0 on from the pennies dept.

hweimer writes "In 2005, SCO got into delisting trouble because they failed to file their annual 10-K report in a timely manner. SCO seems to be headed the same way again for a different reason: the stock price is too low to meet Nasdaq's requirements. Quoting: '[W]hat can a company do to boost its share price? Besides stopping to burn money and come up with a working business model, I mean.'"

2 of 188 comments (clear)

  1. boosting share price by TheSHAD0W · · Score: 5, Interesting

    Many companies buy back their own shares, both to boost share price and to give stockholders a return not based on dividends. I don't know if SCO has the cash to do it any more, but...

    1. Re:boosting share price by badasscat · · Score: 4, Interesting

      Almost all anti-delisting reverse splits I have seen back then ended up as suicides... and even today, they still translate into extended near-death experiences often followed by bankruptcy.

      I think you're confusing the issue a little bit.

      The reason reverse splits rarely work is that they don't solve the underlying problem that's causing the dropping stock price to begin with. They treat the symptoms, not the disease. Which means there's nothing "suicidal" about the reverse split, it's just that they don't really accomplish anything other than keeping the company on the market for a bit longer.

      It's kind of like taking an aspirin for the pain being caused by a brain tumor. You'll eventually die anyway, but it's not because of the aspirin, it's because of the brain tumor. Taking aspirin isn't "suicidal" and in fact has no bearing whatsoever on your health, it just doesn't solve the real problem.

      Lots of people think about stock prices as if they're somehow disconnected from company performance. That's a real dot-com era way of thinking, but we should all be back to reality by now. A reverse split *can* work, but only if it's combined with measures to make the company profitable again. But certainly, if I were a company shareholder, I would want any company that I thought had a good plan for a real turnaround to do a reverse split to keep themselves on the market until their plan started to bear fruit.

      Of course, this *is* SCO we're talking about, so I can't imagine a reverse split would do anything but delay the inevitable.