by 3 hours ago
ANSWERS: 3
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It makes the stock seem more "attractive". People are wary to invest money in a high dollar stock, it creates the illusion of more stock for the company and makes the stock easier to trade by reducing the bid/ask spread. It doesn't change the value of the stock in any way.
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Usually companies that are splitting are known to be doing well. It's a sign of strong revenues. Here is an article on splits: http://biz.yahoo.com/fool/040527/1085664900_2.html
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It's my understanding that it's customary, though not mandatory, to keep share prices under $100. There are some companies who choose not to adhere to this, but most companies feel that it makes their stock easier to quote and trade. So usually, if a company's stock price is trending upward, somewhere around $90 or so they will declare a 2-for-1 split, or maybe 3-for-1. Shareholders will suddenly own twice or three times as many shares as previously, each valued at half or one third what they were before the split.
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