Reverse Stock Split Should Help Commtouch

Dec.18.07 | About: CYREN Ltd. (CYRN)

On Monday, Commtouch (CTCH), a leading provider of email defense systems, announced that all proposals presented to shareholders on its proxy statement for the annual meeting of shareholders held on December 14, 2007 were overwhelmingly approved, including the reverse stock split (by over 92% of the voting shares).

I guess the question is whether this is good, bad, or insignificant news? While in some cases reverse splits signal that a company is at the end of the line, in Commtouch's case, this is not true. The company continues to execute its business model well, and as more and more defense is needed to stop the spammers, Commtouch should continue to grow. The company made this move in order to reduce the number of shares, and to get the share price up over $5, where it’s open to more institutional interest.

It seems that this is a positive move, and the fact that over 90% of the votes were in favor is a good sign. But what’s really important is that it continues to sign deals, and execute. If it does that, then the stock will take care of itself.

Disclosure: The author’s fund holds a position in CTCH and is long the stock as of December 17, 2007.