Business / Technology

Ask The Fool

Too many shares?

Q: General Electric hasn't split its shares since 2000. Is that because it has too many shares outstanding already?

A: It doesn't typically work that way. Splits often take place when a stock's price is deemed too high.

Splits can be largely a psychology-driven event, making a stock look "cheaper" to some investors.

If stocks never split, then a single share of some big companies would cost as much as a car or house.

General Electric does have a lot of shares — more than 10 billion. The number of shares isn't a measure of a company's size, though.

Sirius XM Radio has close to 4 billion shares, for example, while Boeing has fewer than a billion.

What matters much more than stock splits or numbers of shares is how strong a firm is, how quickly it's growing, how successfully it's competing and how each share's value is increasing.

General Electric recently posted operating earnings per share for 2011 up 22 percent over year-ago levels. The company's backlog of infrastructure-related orders, at $200 billion, set a record.

The Motley Fool take

Procter & Gamble in 2012

How will Procter & Gamble (NYSE: PG) fare in 2012?

Well, if the economy is weak, consumers may not stop shaving or brushing their teeth, but they may forgo higher-end items such as tooth-whitening products and may even pass up name brands such as Crest and Tide in favor of private-label products.

In the meantime, P&G and its peers have been juicing their growth rates by expanding their reach into emerging markets.

The slice of P&G's sales that came from outside the U.S. expanded from 62 percent in fiscal 2010 to 63 percent in fiscal 2011. If a 1 percent change doesn't sound like much to you, consider that when we're talking about nearly $83 billion in revenue, it represents hundreds of millions of dollars.

Then there are rising commodity costs, which threaten profits. P&G's strong brands do give it more power to raise prices, but in a tough economy that's problematic, as price hikes may give customers the excuse they need to trade down or buy from a competitor.

Procter & Gamble's stock is currently valued fairly and worth holding, but it's not an irresistible bargain.