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Technology Stocks : All About Sun Microsystems

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To: Charles Tutt who wrote (50702)	7/25/2002 4:37:23 PM
From: JDN	Read Replies (1) of 64865

Dear Charles: The "cost" of options is the dilution involved in their exercise (or the cost of the shares bought to avoid such dilution). The accounting profession fully agrees with you and MANY YEARS AGO we ATTEMPTED to measure this by inventing the FULLY DILUTED EARNINGS PER SHARE CALCULATION. I dont want to get into a disseration on this as to much to type but basically you present two earnings, one is basic (# of Outsanding shares divided into earnings) and FULLY DILUTED which is # of outstanding shares ADJUSTED for outstanding options LESS the number of shares you COULD buy back with cash from exercise, that net figure divided into earnings per share. You can see that anytime you get away from actual into ESTIMATES you get into the problem of estimating and what that leads to. Not such a simple situation IMHO. I would MUCH RATHER leave things alone and somehow RESTRICT stock options to do what they are SUPPOSED TO DO. jdn

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