JDSU (JDSU) is looking for a reversal of fortune.

The long-struggling tech company has asked shareholders to approve a reverse stock split that would finally lift its stagnant shares out of the doldrums.

With JDSU shares stuck below $2 for most of this year, the company says it needs to consolidate the share base to move into a price range more attractive to institutions. Many big mutual funds and other investors are prohibited from buying so-called penny stocks, those that trade for a dollar or two.

The move comes as JDSU has made a flurry of moves aimed at revitalizing its business and its image. Just this month it has dropped the JDS Uniphase name and acquired tunable laser maker Agility.

The optical networking parts maker has 1.6 billion shares outstanding and traded recently at $1.82. If shareholders approve the plan, which calls for a 1-for-8 or 1-for-10 reverse split, the company could reduce its share count to about 160 million, presumably bumping the share price into the midteens. JDSU hasn't traded there since the tech bubble popped several years ago. The stock fetched as much as $124.48 back in August 2000.

Boom, Bust
JDSU's long decline

JDSU is one of several tech shops that issued shares by the wheelbarrowful in acquisitions and did a number of stock splits during the Internet building boom, back when the sky was the limit for telecom stocks. But the industry's fortunes collapsed in 2000 as big network spenders closed their wallets. As a result, JDSU is among a roster of big tech shops that finds itself saddled with an enormous share count and a low stock price.

Nortel

( NT) has 4.2 billion shares outstanding. Telecom-equipment maker

Lucent

( LU) has 4.4 billion shares out. Both stocks have traded in the $3 range lately, well off their bubble-era highs.

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) - Get Report

shrugged off the effects of a big asset sale to

Comcast

(CMCSA) - Get Report

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) - Get Report

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) - Get Report

, 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.