how MSFT uses GAAP rules to hoodwink the investor.....
companies that still use the treasury stock method, without FASB 123's option of "fair value" expensing of options in the income statement, assumes that options or warrants are exercised and the proceeds from the exercise of the options or warrants are used to purchase common stock from the treasury.....
this is where it gets interesting.... the GAAP rules don't say anything about companies being REQUIRED to repurchase shares with the money received, it just assumes the company will do it....
MSFT conveniently forgets to repurchase these shares though... that the rule assumes MSFT will buy to keep dilution from overrunning your stock..... MSFT repurchases small amounts, but the overwhelming amount of money they receive, they pocket as cash flow....
that is the problem.... MSFT is pocketing that money, and refusing to give it back to shareholders.... (how could they, they don't have enough money to repurchase all those new shares anyway)......
this year was unusual MSFT spent $6 billion this year to finally buy back some shares, (most of their net earnings) but this didn't even lower the share count, that is how far out of hand this has gotten......
that is what most shareholders of MSFT do not understand..... and why it is so irritating for Exacctnt, Howe, Bowers, Url... etc... etc.. because they don't know how much value they have lost in MSFT stock..... true value, intrinsic value... not just the stock price, but stock price should have been their first hint....
figure it out, before it is too late...
jon. |
