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Technology Stocks : Intel Corporation (INTC)
INTC 48.31-0.8%3:59 PM EST
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To: Elmer who wrote (151348)12/6/2001 2:57:30 PM
From: GVTucker  Read Replies (2) of 186894
 
Elmer, RE: Now you can argue that the option has value to the employee but why should this be an expense to Intel, other than the cost of missed opportunity of the capitol tied up in the stock?

You can't be serious, Elmer. An option to purchase Intel at a fixed price has an economic value. heck, you realize this value often; you sell covered calls on Intel, right?

If this didn't entail a real cost to Intel, they should give options away to everyone on the planet. Give an option to someone who purchases an Intel based PC or server. Give options to a supplier as part of the payment for raw materials.

Of course, that doesn't happen. And that is because options do have value, and by giving them away, Intel is incurring an expense. If there weren't share repurchases, the owners of Intel would incur this expense by dilution. Intel repurchases shares instead, and thus the owners of Intel incur this expense by having less cash on the balance sheet.
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