How high will Microsoft fly? Message Board

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Technology Stocks : How high will Microsoft fly?

MSFT 507.49

-0.6%

3:59 PM EST

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To: John F. Dowd who wrote (71319)	7/19/2002 12:50:08 AM
From: Exacctnt	Read Replies (2) of 74651

<<<<Actually this qrtr they would be restating earnings upward for all the unexercised options that they had expensed unnecessarily.JFD >>>> I'm not sure that I get your drift. It is my understanding that if MSFT goes to the Black Scholes method of expensing options like it's stated in their footnotes, they would not be able to reverse expenses if the market price drops. According to their 2001 annual report, otpions granted in 1999 were expensed at $20 per granted share over a 5 year period. Options granted in 2000 were expensed at $36.67 per granted share over a 6.2 year period. Options granted in 2001 were expensed at $29.31 per granted share over a 6.4 year period. Those expenses occur even if the grant price is deeply underwater. That's one of the negative results from using Black Scholes. It doesn't allow changes in the original expense calculation made at the time of the grant.

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