MSFT stock options...i mentioned earlier the farce
of accounting allowing options to be not counted as a cost of labor...msft principal pay is often in Options....here's part of an article from Parish & CO...
One such issue, although technically legal and not addressed in the auditor's charges, involves the accounting for stock options. When stock options are exercised, the options are retired as the employee takes ownership of the stock. The value of these “retired” options should not be a subject of debate. Upon exercise, the options are valued at the market price of the stock less the exercise price and the employee pays W-2 taxes on this gain, even if the stock is not sold. The company then takes a tax deduction for wage expense for the same amount. What is surprising is that not a dime of this expense is charged to earnings at Microsoft, which they could voluntarily do. This amount alone for 1999 should exceed $10 billion even though net income is only $7.8 billion. Who would guess that Catepillar and Hewlett Packard are actually much more profitable than Microsoft?
Is it appropriate to provide Microsoft with a $10 billion subsidy for an expense they say does not exist? That is probably a shining example of bad government policy.
The remaining unexercised stock option liability is a completely separate issue and a debt just as real as the current stock quote, especially if half of the options are currently vested and exercisable. We all know that stocks can be over and under valued yet the market gives us a price on any given day and that is the price. The Black Scholes is a great mathematical model yet has become nothing but a Trojan Horse for plundering the retirement system. What the Federal Reserve might concern itself with is that this debt, $60 billion at Microsoft, has no interest cost that hits the income statement and increases $800 million with each $1 increase in the stock price. Simply put, Microsoft is somewhat immune to your rate hikes, which explains why the stock is increasing as you raise rates and creating a Long Term Capital like debt pyramid.
Microsoft is also dominating the financial media and making it difficult for good reporters to get this story out, which I find disturbing. Most major publications have received my study results numerous times during the past year. Also, PR Newswire abruptly stop issuing my press releases last fall due to objections from Microsoft.
Company Press Release
SOURCE: Parish & Company, Portland, Oregon
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