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Technology Stocks : Intel Corporation (INTC)
INTC 46.96-2.8%Jan 16 9:30 AM EST
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To: Michael Bakunin who wrote (97521)1/25/2000 1:42:00 PM
From: Saturn V  Read Replies (1) of 186894
 
Ref- "In re options: in the real world, exactly how is an options grant or a discounted stock sale not an expense? -mb"

Most companies are not cash rich and do not repurchase stock. So the sale of stock to employees for stock ownership programs shows up in the balance sheet under capital additions. Even employee options show up under capital additions. Thus the cost of the employee stock sale or stock options shows up as a dilution of existing shareholders. There is a hidden cost since the employee stock purchase are typically at 85% of market value. This is probably slightly below the value which would have been realized if the stock had been sold on the market. Again options are sold to the employee at the price of the stock on the date of the grant. Obviously the Market cost of the option is higher. So there is no expense, but the hidden cost is in the form of not getting the full market value.

Intel now has a big cash hoard, and is now offseting the dilution by repurchasing the shares. From the accounting point of view this is a separate transaction.In the past before Intel began company acquisitions, you want you could review Intel's capital additions and stock repurchases and come up with interesting metrics. However since the stock repurchase also finances acquisitions, the situation is muddled.
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