Tracking stock

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A tracking stock is a security issued by a parent company to track the results of one of its subsidiaries or lines of business. The financial results of the subsidiary or line of business are attributed to the tracking stock. Often, the reason for doing so is to separate a high-growth division from a larger parent company. The parent company and its shareholders remain in control of the subsidiary's or unit's operations.

[edit] Examples

During the dot-com bubble, some companies that predated the bubble identified their internet operations as high growth divisions that would benefit from a tracking stock. The best-known example is The Walt Disney Company, which issued a tracking stock for go.com. At around the same time as the bubble ended, Disney retired the tracking stock. Sprint Corporation also had a tracking stock for its cellular telephone operations.

As of 2007, one major company in the United States that still has tracking stocks is Applera. Applera has two tracking stocks, one for its Applied Biosystems Group (NYSE: ABI) business unit and one for its Celera Group (NYSE: CRA) business unit; the only way to own stock in the company is through one or both of the two tracking stocks. The Applied Biosystems stock is included the the S&P 500 stock index, but the Celera Group stock is not.