George Mannes

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Excited? Don't Be. It's Reverse-Split Time

George Mannes

The high-speed Internet service Excite@Home (ATHM Quote) is seeking shareholder approval for a reverse stock split, primarily to avoid getting delisted from the Nasdaq Stock Market.

The AT&T (T Quote)-controlled company thus joins a growing number of tech outfits considering reverse splits -- issuing one new share to replace two or more old shares -- in order to shore up their ailing stock prices.

The rush to reverse split in recent months provides a poetic counterpoint to the stampede of splits in the other direction that Internet companies effected back when the market was much more bullish on tech stocks. In fact, @Home did a 2-for-1 stock split itself two years ago, before merging with Excite.

In the past month, companies that have announced their intention to do a reverse split, or have completed one, include Egghead.com (EGGS Quote), Parts.com (MIRM Quote) and NetRadio (NTRC Quote).

Excite@Home's stock, which peaked at $94.66, adjusted for that 1999 split, fell 58 cents Monday, or 21%, to close at $2.22.

The stock has been hammered in recent days after the company announced a financing deal that critics have labeled a "death-spiral convert."

Reverse splits "are never a good thing," says Nick Moore, portfolio manager for Jurika & Voyles. But for Excite@Home, he says, the real story is the recent financing, which Moore says makes the stock a must-avoid. "You cannot own it here or there. You cannot own it anywhere," he says. Moore doesn't own the stock.