Sun looks to brighten stock with reverse split

So, Sun investors, does that $5 stock price got you down? Change may be in the wind.

No, there is no crystal ball or vision of a mega-buyout around the corner. But rather, the company is looking to throw a little Miracle-Gro on the stock.

Sun Microsystems is proposing a 1-for-4 reverse stock split and is asking its investors to sign off on the idea at its annual shareholders meeting on November 8, according to its filing Wednesday with the Securities and Exchange Commission.

If investors approve the reverse split, four of those $5 stocks would be combined and increase in value to a single $20 share, for example. Investors may feel a little richer, saying they own a $20 share. But, in reality, their wallet will know nothing has changed. It's like swapping out four $5 bills for a $20.

Sun, however, notes the company can benefit from this reverse split.

"The investing guidelines for certain institutional investors and investment funds prevent them from investing in our common stock at current price levels," Sun states in its SEC filing. "A higher price could change all that."

Sun also noted other benefits would include putting its share price at a level comparable with other industry titans with stock that is widely held. But the filing doesn't mention what would happen if these "other major" companies did the same: Sun would be a $20 stock among $80 stocks.

And, of course, should Sun get the approval it seeks from its shareholders, there is no guarantee that the stock would continue to trade at a $20 level. While Sun notes other companies like itself with over a $1 billion market capitalization have seen median returns of 3.6 percent in the year after a reverse split became effective, there are no guarantees of similar results.

[scdecade]

Ugh!

Typical, typical, typical.

All Sun is good for these days is grand plans and excuses. Don't tell me what you're going to do tell me what you did. Sun makes "major announcement" with Google! Yeah, except there aren't any $$ figures discussed, no purchase orders, no products to talk about, nothing. Sun gives away more code for free is probably all that was. Sun and Intel! Momentous, except for the fact there weren't any products announced and it's already too late for Sun to capitalize on Intel quad core. Once again, Sun shows up with grands plans and no results. Zero results.

Aaah yeah, you Sun fanboys say, but the future has amazing new products! Well, they've been saying that since 2001. They've release a bunch of stuff but where's the money? Where's the profits? Heavy R&D could be justified by hefty profit margins. Sun has decent gross margins but no net. Nothing.

What if, lo and behold!, Sun stock suddenly takes off? Well, in that case above a certain threshold all of the profit gets handed over to private equity company KKR. You see Sun accepted money, which they claim they didn't need, in return for warrents and interest. If Sun does a mediocre job, KKR gets nothing but interest. If Sun takes off KKR get rich and Sun shareholder get shafted once again. Sun has got to be the least shareholder friendly company on earth.

So here were are listening to Sun's grand plan. A grand plan that does everything except build a more profitable, growing company for the benefit of it's owners. Typical and pathetic.

Sun, shut up, forget about private equity ripoffs, forget about "the future", and deliver solid business results TODAY. Now. Bar all Sun executives from self-righteously pontificating about the ethereal future until solid business results materialize. Results first. The rhetoric is utterly hollow.

[likes2comment]

Last resort

is what a reverse stock split is. Typically done by desparate companies just before declaring bankruptcy or being delisted to the pink sheets. The couple of companies I've had that did reverse splits, the stock stayed up for a couple of months and then sank back down below the leve it was before! (ie: .50 cents reverse split 20 to 1 took stock to $10. 10 weeks later it was back at .40 cents per share.) This is definetely NOT a stock to buy. Maybe Sun or java or whatever they are now calling themselves will pull it off. I doubt it.

[roboke]

Make The Board Of Directors Accountable

As a former Sun Employee and current shareholder, make the
board of directors accountable for 7 years of underperforming and
under achieving. In my view, Sun has very poor mgt from the top
down. The way to get Sun stock up is new mangement and a big
reduction in employees.

Robert Greene
www.greenesearch.com
[e-mail]