eg: for every ten "old" shares, you receive one "new" share. The "old" shares are removed from trading, and the "new" shares become the standard stock in the company.
There are negative connotations to doing this: it becomes necessary (or useful) to do this when a share price falls below a certain point, and hence it becomes difficult to determine (or trade at) a fair value for the share - the implications are that the share price is falling, and hence it's not a good investment prospect (in the general case). Consider: with DMN trading at the moment at .3 cents per share, the next step down is .2 cents per share (down 33%), and the next step up is .4 cents per share (up 33%). Imagine a shift like that in a standard blue chip - the market would be in a furore.
So if they consolidated 10 for 1, the current price would be 3 cents per new share, but with a great deal more fine granularity available in the share price. It would make for a much less bumpy ride. Maybe the price would settle at 2.5 cents per share, or 2.8 cents (for example.)
The problem with doing it - from the perspective of those who've just bought in - is that it leaves much more room for the share price to fall.
It may happen; it may not ... we'll see.
DMN Price at posting:
0.3¢ Sentiment: LT Buy Disclosure: Held
