In the stock market, a reverse split reduces the number of outstanding shares and is supposed to increase the price-per-share proportionately. If a stock sells for a dime, say, and undergoes a 1 for 10 reverse split, the price should go up to $1, but that is deceptive, because the capitalization hasn't changed; there are fewer shares outstanding.

On June 21, Nextwave Wireless, a San Diego wireless technology firm, announced a reverse split of 1 for 7. The price of the stock was then 28 cents. Theoretically, it should have gone to $1.96. But it got to $1.75, then drifted down as low as 75 cents. Today (July 19) it is down more than 8% to 89 cents.

Originally, the company emerged from complicated bankruptcy proceedings. San Diego real estate entrepreneur Doug Manchester owned 11.6% of the company at the time of reorganization; he was the second largest shareholder. In 2007, shares began trading and got as high as $77.70. The next year, they got as high as $87.15. Manchester's paper gains have evaporated. In the proxy statement of May 6 of this year, Manchester still owned 7.9 million shares, or 4.8% of the total.