|
 On Wednesday, the iPad maker and largest U.S. company by market
value said it would do a seven-for-one split, knocking its share
price down from the $500-plus level to something closer to $75. The
stock is up 8 percent on Thursday.
It becomes the fourth member of the S&P 500 to announce a split in
2014. That is a pretty paltry pace when compared with the late 90s,
when nearly 100 companies split their stock to attract more
investors. Apple Inc's move might inspire others, some believe, but
only modestly.
"It could become a bit of a trend when you see a name like Apple
decide to split the stock," said Ken Polcari, director of the NYSE
floor division at O'Neil Securities.
Polcari said Priceline Group Inc, the most expensive single stock on
the S&P 500, is a prime candidate. Other pricey stocks such as
Chipotle Mexican Grill Inc, trading above $500, or Amazon.com Inc,
above $300, could follow.
"You get stocks like Priceline that trade above $1,200 — maybe
they'll look at this, see the excitement it generates and decide to
do the same thing," Polcari said. "Google also sticks out there as a
potential name that could be split with no problem."
Stock splits do not change the value of the company, one reason why
Apple CEO Tim Cook said just two years ago that a split does
"nothing."
That is a view many corporate managers shared in recent years, as
the institutional investors who own the vast majority of shares are
not concerned about individual share prices.
According to Standard & Poor's, in every year between 1997 and 1999
at least 90 S&P components split their stock. After the dot-com
bubble burst, splits went out of favor and have become uncommon.
There have been just 75 splits since 2008.
[to top of second column] |
Cook now feels differently, saying on Wednesday that the company was
taking the action "to make Apple stock more accessible to a larger
number of investors."
Apple currently carries the third-highest price in the S&P 500,
behind Priceline's $1,219.95 and Graham Holdings Co's $690.68. In
the broader S&P 1500 Composite Index, there are 26 companies trading
at $200 or more a share, including well-known names such as Visa Inc
and Regeneron Pharmaceuticals Inc.
Some money managers think Apple's move will bring out more splits.
"I think other companies will follow suit because it's difficult to
buy round lots when a stock price gets too high," said Kim Forrest,
senior equity research analyst, Fort Pitt Capital Group in
Pittsburgh.
"Higher prices per stock makes them difficult to buy for $500,000
portfolios."
(Reporting by Rodrigo Campos; editing by Andre Grenon)
[© 2014 Thomson Reuters. All rights
reserved.] Copyright 2014 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
 |
