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Politics : Ask Michael Burke

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To: Don Lloyd who wrote (76447)	2/23/2000 4:23:00 PM
From: Skeeter Bug	Read Replies (1) of 132070

>>The creation of new shares by a company has no real cash cost to the company.<< the moment those shares are included in shares outstanding, the loss to the company is precisely the opportunity cost of selling those shares as measured in dollars. real dollars. >>It has a real dilution effect to the existing shareholders and would have a tendency to reduce the market value of the company to a non-owner to the extent that dilution is expected to accumulate at a given rate.<< owner damage has been described. potential buyer damage seems to be at issue. if all of a sudden $10 billion dollars was added to msft's cash position is it rational to value msft at a higher level, all else being equal? i'd say yes. so non-owners value msft lower b/c it loses a billion dollar opportunity cost. it impacts the way both owners and non-owners view the stock. btw, opportunity costs are VERY REAL.

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