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Strategies & Market Trends : Value Investing

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To: jeffbas who wrote (14049)	2/28/2002 5:50:37 PM
From: sjemmeri	Read Replies (1) of 78702

I am neither an accountant nor 1/10th the stock analyst that guys like Bob and Don are but I won't let that stop me from chiming in on this issue. To me, there is a huge practical issue with accounting for options in the earnings calculation. Why would you want to include a charge based on any theoretical model - much less one that is krap regardless of how many prizes have been awarded? I don't say that based on personal analysis but rather I'm merely listening to the market. Today, one can get Jan 2004 INTC $55 leaps for 1.35 despite the BS model saying they are worth 1.96. Would you charge Intel 1.96 on earnings for something they can purchase in the open market for 1.35? OTOH, one must pay 0.90 for Jan 2004 MSFT $120 leaps although BS says they are only worth 0.37. So Microsoft gets away with subtracting only 0.37 when their true market cost would be more than twice that. So I'm with Don on this one, require better disclosure of option compensation because it is important to know about it. But don't include (even more) bad, made-up numbers in the earnings calculations.

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