Ask Michael Burke Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : Ask Michael Burke

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: Mike M2 who wrote (82422)	7/19/2000 11:59:50 AM
From: Don Lloyd	Read Replies (1) of 132070

Mike - [To all, even BGR -g- excellent article about the impact of stock options on income tax liability for CSCO, MSFT . Note the Fed study about debt financed share repurchases. HO HO HO TL&EV. www10.nytimes.com. Mike ] While much of this article is true, there is also much that is false and misleading. For example - "...Options carry significant costs. One is that companies must buy back millions of their own shares to offset the stock they have dispensed to employees at much lower prices in option programs. If they do not repurchase stock, there will be so many shares on the market that the company's earnings, on a per-share basis, will plunge. This is known as dilution...." This is entirely bogus. As noted later in the article, a typical high value for dilution is 2% per year if no shares were re-purchased. This is less than inflation and a 2% fluctuation in value in a day is not even usually news for most of these stocks. This problem is NOT the options, it is the use of shareholder cash and borrowings to fund the buy-backs. The problem that the options DO cause is the disconnect between reported earnings and operational reality. Regards, Don

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next