Reverse stock splits used to be considered the last gasp of a dying company, but have been more common recently because technology stocks have been so depressed. Companies that have used the tactic to try to avoid a delisting include Commerce One, AT&T and Palm, to name a few.
Saba Software announced on Friday that its board has approved a one-for-four reverse stock split effective May 12. The company received notice in March that it faced being delisted from Nasdaq for failing to meet the minimum bid price requirement of $1. The reverse stock split will increase the value of each share by four times, at least temporarily. Immediately after the split its stock will once again be subject to the whims of investors.
Saba Software’s stock has plunged from over $6 in December 2002, when it had a market cap of over $360m, to just $1.13 at the time of writing, giving it a market cap of $60.2m. As well as the general downturn in technology stocks the company’s shares have slumped as its results have disappointed. In its most recent quarter ended February 28 the company posted sales of $9.6m, down 26.6% year on year. It posted a net loss of $4.7m, up from a net loss of $3.8m in the year-ago period.
Software licensing revenue was down a damaging 50% year on year to $3.15m. Nevertheless the company’s chairman and CEO, Geno Tolari, put a brave face on the financials, pointing out that revenue was up 29% from the previous quarter, and citing the fact that the company won 11 new customers in the quarter, including BMW, Petrobras, AstraZeneca and Abbey National.
Saba Software offers learning, content, collaboration, employee performance management, and analytics software. Competitors include Witness Systems Inc, the privately-held Blue Pumpkin Software Inc, IEX Corp, Aspect Communications Corp, and Genesys Telecommunications Laboratories Inc.
Source: Computerwire
