How high will Microsoft fly? Message Board

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Technology Stocks : How high will Microsoft fly?

MSFT 490.03

+1.4%

10:03 AM EST

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To: jonkai who wrote (71800)	7/28/2002 8:49:43 AM
From: Jordan A. Sheridan	Read Replies (3) of 74651

Yes jonkai, I see a problem...the problem is with your math... Every time you discuss ESO's, you seem to neglect the fact that when they are exercised, some portion of that exercise returns to Microsoft as cash. In your previous example, you state the MSFT issued 800 million shares in the last 5 years and that 36 billion needs to be transferred out of the cash pile to cover them. You characterize this as a cost to shareholders of $36 Billion dollars. This is simply not true. 1. What was the average strike price on the options issued over that period? 2. How many of the 800 million granted have already been exercised? The physical cost to the shareholders is more fairly calculated as today's price minus the average strike price for the options that were granted, multiplied by the actual number of options left outstanding. I think if you do that math, especially if you remove the averaging and calculate it year by year, you'll get a much different picture. Also, keep in mind that when you are flogging the board with all the things options cost shareholders, you forget to mention some of the things they have gained...Think back to 1997-1999 or thereabouts...options were one of the main vehicles that the tech industry in general used as an additional incentive to attract the best and brightest employees. As a shareholder, I certainly think that the ability to attract and retain the best people in a very hot, then a very tough economy is worth a lot to the company and to my investment in the future of that company... JS

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