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This is my response to the "Our Take" portion of the immediately preceding post.

I do not believe that E*Trade's board resolved to execute a reverse stock split out of a concern for investors. The board did so based on a concern, I believe (and granted, I am speculating), for the company's ability to survive and/or to be sold. Here is my Survival Thesis:

1. This firm is in a great deal of debt. With a stock price languishing between $1.50 and $1.80, which it was doing pre-split, the firm's lenders had little to boost their confidence in the company -- specifically, little incentive to amend more favorably for E*Trade the debt-service terms and/or little incentive to lend E*Trade more money. Suggestion: the split was a last-ditch effort that the price would rise, confidence in the firm on the part of lenders would increase, and the cost burdens of its various debts could be re-negotiated. The preceding statements were the product of my imagination and I have no factual basis rooted in reality for making them.

Here is my Sale Thesis:

1. The board has discussed (again, I am totally guessing) a possible sale of the company. With a stock price at $1.50 to $1.80, which is what it was pre-split, a total purchase price for the company would not be far off from that. In other words, when you're a buck fifty from zero, there ain't much wiggle room. "But, guys, let's see if we can get our stock in the twenties, okay? Now we have something to talk about with buyers. Plus, once our share price is over the $5 level, institutional investors will be permitted to buy us and we will become marginable -- all of which spells more bids for our stock, and, hopefully, a higher stock price for OUR EVENTUAL SALE."

Again, this is all guesswork. But did they do it FOR THE INVESTORS? No. Remember, investors who buy the stock are buying in the secondary market and whatever price one pays for the stock will go into an investor's pocket, not E*Trade's.

Finally, note that if you were to adjust the current price of the firm to its pre-split level, it's now below a buck fifty. It's at $1.38.

Full disclosure: I own, post-split, 2,200 shares of E*Trade and I'm holding, and I view this holding as a gamble. Not a wild bet, but I'm clear that this holding isn't Coke, or P&G, or 3M, or IBM, or Clorox, etc., etc. If this stock is a large percentage of your portfolio, you are perhaps placing too much faith in how dice will roll for you on the craps table.
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