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Technology Stocks : Qualcomm Incorporated (QCOM)
QCOM 166.05+0.6%Nov 19 3:59 PM EST
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To: kech who wrote (118959)5/19/2002 11:56:22 AM
From: Stock Farmer  Read Replies (1) of 152472
 
Tom: Good to focus on the denominator or eps, or number of shares issued, which is already in the denominator and reported as diluted number of shares, vs the "cost" of options which be an attempt to charge for the cost of these options in addition to the dilution in the numerator of eps. So far, most of the effects of options is tracked through diluted eps.

You have fallen for the same trap.

Qualcomm used shares outstanding as 767,903 and 808,996 diluted in their latest 10-Q. How many stock options do you think are outstanding Tom?

You've clearly gone and computed future earnings in the stock price if you are willing to pay $32 for $0.48 worth of annual earnings. How much future dilution have you factored in? How do you intend to go about figuring that out?

This "it's all in the fully diluted" numbers is the kind of monetary myopia that wall street and other insiders want you to believe.

A company makes $0.48 annual EPS and you would pay $32 for a slice of that. In the absence of stock options. For example. Now, what would you pay for this same company if the dilution rate is 3% per year due to stock options?

Try to answer this without addressing the difference between stock price and grant price.

Have fun.

John.
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