Ford's Two-for-One

After months of rumor, the Ford Motor Co. finally did it. In May, Ford's board announced, the company will ask its stockholders to approve a two-for-one stock split that will increase the number of outstanding Ford shares to 110 million. At the same time, Ford directors made the ownership of Ford stock a bit more attractive by increasing the quarterly dividend from 75-c- to 90-c-.

Ford's decision to split its stock was taken with a sharp eye on auto sales charts. Ford shares, issued at $64.50 five years ago when Ford went public, have climbed to a high of $117.50--a price so steep that it discourages purchases by small investors. Meanwhile, the stock of Ford's archrival, General Motors, has been selling briskly at around $55. Since the automakers reckon that a shareholder is likely to buy the car made by the company in which he has invested, Ford was understandably anxious to widen ownership of its stock.

Stock splitting has a mystique all its own, and subjects the stock to sudden--and not always rational--gyrations (Ford has gained 37 points since June--mainly because of strong sales and earnings but partly in the hope of a split). Announcement of the split is taken by speculators as the signal to take their profits, and the stock takes a jolt (Ford lost four points on the announcement day).

But outsiders and insiders both love the splitters. Some investors take a simple pleasure in owning 20 shares of something (quoted at $50) instead of a measly ten (at $100). Many of the outsiders also confuse cause and effect, thinking that a split in itself is going to increase the value of their holdings. More sophisticated investors think that the split itself may be worth a few points in broadened trading. More important, they take it as a sign of management confidence, a kind of ratification by management that the ''high" pre-split price of their company's stock is soundly based on earnings and prospects.

Though the Ford split is the first major one of the new year, it is certain not to be the last. With the bull market pushing many stocks into the high-priced range, stock analysts expect that splits in 1962 will top even the record of 320 set in 1959. Among the most talked-about candidates for early splitting: Bristol-Myers, Campbell Soup, Litton Industries, Quaker Oats and Polaroid Corp.

This file is automatically generated by a robot program, so reader's discretion is required.