Sony’s Shares Soar on Word of Stock Split

Sony Corp. on Monday joined the growing list of companies announcing stock splits. And as with most other split announcements lately, this one sent the stock soaring to new heights--even though the split won’t happen until May.

Sony, the consumer electronics giant and maker of the best-selling PlayStation home video-game machine, said its board approved a 2-for-1 stock split effective May 19.

The company’s New York Stock Exchange-traded shares, which track shares traded in Tokyo, zoomed $18.19 to a record $254.69.

The NYSE stock traded for as little as $65.50 earlier this year.

Sony shareholders registered as of March 31 will receive an additional share for each share held.

Stock splits don’t change anything about a company’s financials, and the stock’s price-to-earnings ratio remains the same. Splits just redistribute a company’s equity over a larger number of shares, lowering the dollar price of the stock and making it more affordable to average investors.

Rightly or wrongly, however, many investors perceive stock splits as bullish indicators of a company’s prospects.

Sony’s stock has already tripled in the last 12 months, driven by optimism that a far-reaching reorganization plan announced earlier this year and the release in March of the successor to the PlayStation game console will fuel earnings growth in 2000.