JDSU Reversing Course

The low stock prices have pushed some companies to at least consider the reverse-split route. Lucent, for one, received shareholder approval in 2003 for one. Back then the company's shares hovered around $1, a potential cutoff point for New York Stock Exchange delisting. But Lucent shares have risen since as the company's results have improved, and the New Jersey company hasn't executed the reverse split.

The industry's most famous reverse split came in 2002 at Ma Bell herself, when AT&T (T) shrugged off the effects of a big asset sale to Comcast (CMCSA) with a 1-for-5 split. And the share glut issue reaches even to the highest echelons of the telecom business. Computer networking king Cisco (CSCO) has 6.4 billion shares outstanding despite a four-year, $19.3 billion share-buyback binge. But with its shares trading at $18.10, Cisco has no need for a reverse split.

To be sure, reverse splits are merely cosmetic gestures with no direct bearing on the company's underlying business. And though lately it has become a common method of sopping up a huge share counts, it doesn't necessarily reverse the slide in a falling stock.

Take Agere (AGR), for example. The communications chipmaker, which was spun off from Lucent in 2001, turned to a 1-for-10 reverse split in May to try and stabilize the stock price and maintain its good standing on the NYSE. But since May, Agere's stock has fallen 23%. It traded at $10.86 Friday.

>To order reprints of this article, click here: Reprints