How high will Microsoft fly? Message Board

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Technology Stocks : How high will Microsoft fly?

MSFT 478.29

-1.8%

Nov 20 3:59 PM EST

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To: Just_Observing who wrote (43598)	4/28/2000 9:20:00 AM
From: GVTucker	Read Replies (2) of 74651

Just Observing, RE: If we have a severe market correction ( MSFT into the 50s -a low probability event), MSFT could lose billions of dollars, unless they have begun to cover some of their 163 million puts. These are trying times for MSFT and, IMHO, the new 70 million options granted to employees is a dangerous decision. Just to play Devil's Advocate, think of the new 70mm options grant in another. MSFT is now short calls for 70mm shares of stock. Thus, they have not only transferred some costs that have would have otherwise been a direct cash outflow (due to either the cost of employees leaving or the cost of more attractive cash packages), but they have also actually hedged a significant piece of the 163mm shares that result from the short puts. So instead of increasing the balance sheet risk with the 70mm of options to employees, MSFT has actually decreased the balance sheet risk.

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