• United States

Changes afoot at Broadwing

Oct 04, 20042 mins

* Corvis changing name to Broadwing

Corvis, the parent company of Broadwing Communications, last week announced that it is changing its name to Broadwing Corp.

The name change will effective Oct. 8. At that time the company will trade on the Nasdaq as BWNG.

Although Corvis will continue to manufacture its optical networking products and sell those under the Corvis brand, the company says that the Broadwing brand is more recognizable. 

Corvis also announced that Mark Spagnolo, CEO of Broadwing Communications, will be leaving the company after a “six-month transition period.” David Huber, chairman and CEO at Corvis, will become the CEO of the communications division after Spagnolo’s departure.

The company also announced that it is issuing a one-for-20 reverse stock split. Stockholders as of Oct. 8 will receive a onetime one-for-one stock dividend.

After the reverse split and stock dividend Broadwing’s shares of common stock outstanding will be about 62,170,000 compared to 621,729,061 today.

One financial Web site says that a reverse stock split is usually a bad sign because the company is trying to make its stock “look more valuable, but in reality nothing changes.” Companies sometimes take this route if they are trying to avoid being de-listed.

And as it turns out concerns about being de-listed did motivate the company. Corvis wanted to get its stock price in line with peers such as AT&T, MCI and Sprint, says Broadwing’s vice president of investor relations Andrew Backman. Corvis also wanted to be sure it exceeded Nasdaq’s requirements for being listed, he says.

According to the Securities and Exchange Commission “companies often split their stock when they believe the price of their stock is too low to attract investors to buy their stock.”

Backman went on to say that Corvis in fact is hoping the company will be attractive to more investors after the reverse stock split.