Monday, October 26, 2009

Unisys FINALLY back above its 1977 IPO price!!!! (UIS)

....And it only took a "one-for-ten" reverse share split! Note the chart below, illustrating Unisys' remarkable feat of sitting out the 30-year bull market in equities(^GSPC=S&P500).

Sorry about my sarcasm. IT-services firm Unisys (UIS) shares are trading up over 1,000% to 29.52 this morning, thanks to a reverse split that gives investors 1 share in exchange for every ten they previously held. The rationale is that many big institutional investors automatically "screen-out" stocks under $5 for their portfolios, due in part to commission costs (2-3cents per share trading commission hurts more on a $2 stock than a $26 stock).

Just to clarify, a reverse split does NOT change any underlying fundamentals about the company -->> previously it traded at $2.62 and had (estimated 2010) earnings of 20cents per share, now it's at $26.20 and estimated $2.00 per share in earnings = no change in valuation, just shares outstanding.

All snide comments aside, recent results have been positive for Unisys. Earnings estimates for this year and next have been creeping up after a few quarters of decent results. Best of luck to them as they attempt to improve upon decades of under-performance.

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