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Technology Stocks : George Gilder - Forbes ASAP
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To: donnacat who wrote (2416)1/6/2000 2:40:00 AM
From: Theophile  Read Replies (1) of 5853
 
The following was sent to me: Employee Options considerations for NOVL. Anybody shed some light on this?
Thanks:

Reference Bloomberg Magazine, page 22&24, Jan & Feb 2000:
Buybacks Bite Back by Mathhew Stichnoth
"Increasingly, companies are using stock buybacks to fund management
incentive options, in many cases borrowing to do so. " The company that
would need to repurchase the highest percentage of outstanding shares to
cover their option grants is Novell.

Options outstanding (millions of shares) 120.2
Common Shares Outstanding (millions) 335.0
Options as a % of shares outstanding 35.9

Next:
Adobe 32.9%
Apple Computer 32.8
Parametric Technology 29.1
Dell 28.4
Silicon Graphics 27.9
Cendant 25.5
Fruit of the Loom 21.2
And more on list

The article states the following:
"Of all the overrated, underscrutinized, and generally misbegotten actions
that company management take 'for the benefit of their shareholders,'
share buybacks must be near the top of the list. . . .these repurchases
do is siphon assets away from more productive corporate uses. ? they can
mask a transfer of wealth from stockholders to management. .. companies
taking on more debt to fund buybacks."

Recent share buybacks do not reduce the company's shares outstanding - -
when options are exercised the stock has to come from somewhere . Issuing
new shares is dilutive, so typically company fulfills option obligations
with shares it buys on open market which are very expensive today.

I do not know if Novell is planning a share repurchase program or if they
have sufficient stock on their books to cover options - donna

PS long Novell and concerned
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