Gateway Communications OKs Reverse Stock Split

Gateway Communications Inc. said it will ask shareholders to approve a one-for-200 reverse stock split at the company’s annual meeting scheduled for June 17.

The Irvine data communications equipment maker said the split will reduce its outstanding common shares from 725 million to 3.6 million. Shareholders also will be asked to approve a reduction in the number of authorized common shares to 20 million.

Gateway said the huge float generated by its large amount of common stock “requires a great deal of activity to move the stock. Even with some very good numbers recently, the stock really hasn’t gone anyplace,” said Mitch Berry, marketing coordinator.

In addition, reducing the number of outstanding shares will “raise our legitimacy in the market,” Berry said. Based on Wednesday’s closing price of 3 1/8 cents, Gateway’s stock will trade around $6 when the split is complete.