Dying stock forces US Interactive to face Nasdaq delisting hearing.
US Interactive is running out of time to maintain its stock listing on the Nasdaq.
Short of a miracle, its stock, currently priced near 30 cents a share, is not likely to reach the $5 minimum bid price that it must maintain for 10 consecutive trading days prior to Jan. 29 to remain on the Nasdaq National Market.
The company disclosed its listing problems last month, and last week it announced the closing of its Los Angeles office to continue cost-cutting efforts.
Currently, US Interactive also fails to meet another Nasdaq listing requirement: a $15 million minimum market value of shares owned by the public. The value of its so-called public float, which excludes stock held by insiders, is just under $5 million.
Shawn Southard, director of investor relations at US Interactive, says the company expects to request a hearing at Nasdaq by the Jan. 29 deadline, in keeping with customary procedure. The company hopes that any plan it presents will bring US Interactive back into compliance with listing requirements, Southard says, but he declined to give details. Nasdaq then will decide whether to approve the plan.
Typically, companies engineer a reverse split in order to bring their stock price up to the required minimum, which is either $5 or $1 on the Nasdaq National Market , depending on how the stock was listed initially. If a stock is trading at, say, $2.50 and its minimum bid price is $5, a company will do a reverse 2-for-1 split to bring its share price up to $5, which must then be maintained for 10 consecutive trading days.
However, US Interactive is not alone in the sinking stock boat. Renaissance Worldwide stock has fallen below a dollar and recently received a delisting warning from Nasdaq. Web integrator Xpedior stock is also under a dollar. And companies like Lante, Rare Medium and Razorfish are struggling with stocks below $2.
Using its current share price of 31 cents, however, US Interactive would have to undertake a 16-to-1 reverse stock split. Even then, it would fail to meet listing requirements for a minimum public float, without any additional changes.
If the company is eventually delisted from the Nasdaq National Market, it expects to move to the OTC Bulletin Board, says Southard. The Bulletin Board is a regulated electronic stock quotation system, which has no minimum quantitative standards for issuers and requires only that they remain up-to-date with SEC filings. Stocks trading on the Bulletin Board are far less liquid than those trading on the Nasdaq or any stock exchange.
In a fight for its public life, US Interactive has to show a killer survival plan.