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Technology Stocks : Long Term Investors' Outpost
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To: Uncle Frank who wrote (337)8/8/2002 5:40:27 AM
From: Seeker of Truth  Read Replies (3) of 562
 
It's easy to see that options are an expense if we look at the exercised options. One day the company sells shares at a certain price to the optionholder. On that same day he/she can sell them into the market at three times the price. That is a loss to the company. Those shares are not just promises to pay; they are a piece of what you and I owned before the operation was done. They have sold something worth 30$ for 10$. The shares have been diluted and each of our shares are worth less than they were before this happened. Incidentally, the talk of options being necessary dates from pre tech bust. Nowadays, we all know, engineers are happy to keep their jobs and get normal progression through the ranks salaries, forget options. If options again become necessary then we should subtract the option losses, the $20 above from earnings. I think it's a great shame that Intel, MSFT etc. don't see the point. They can't fool Buffett and I think they mustn't fool us.
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