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Technology Stocks : Advanced Micro Devices - Moderated (AMD)
AMD 203.76-1.1%3:59 PM EST
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To: whortso who wrote (66323)12/27/2001 4:05:25 PM
From: pgerassiRead Replies (2) of 275872
 
Dear Whortso:

Do you not know how the cost of options are calculated for the stock buybacks? Take the cost of the shares needed to keep fully diluted shares under the cap decided by the shareholders (its a number of shares limit). That is given for this quarter before the options are granted (it is required to assume that all options granted will be vested). For those options being exercised this quarter (they were granted previously), the base price of the shares are paid by the employee to the company and this shows up as other income (Intel shows this as revenue in the earnings statement (just another "good for me, I include, bad for me, I exclude" shenanigan by Intel)). So the revenue received by Intel for the base price of the share exercised is already in profits but, the cost of those shares is not. If options are not exercised, the share buybacks do not need to be as extensive as the dilution does not happen as much. What Intel does is repricing the options so they will be exercised or granting even more options to keep the old amounts the same.

Thus, the share buybacks in any quarter covers just those options that Intel figures will be exercised in the future. The revenue was already recognized but, the costs are not and show up in the share buyback costs (off GAAP earnings).

Pete
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