Dear GVTucker:
Shares outstanding somehow are changing when they should be the same. Look at the Third quarter earnings report. The first and third columns are for the period ending September 28, 2002 but show different share amounts for outstanding and diluted. For the three months ending 9/28/02, the shares outstanding were 6,646 million yet for the 9 months ending 9/28/02 they claim 6,669 million shares. Ditto for diluted shares, 6712 and 6792 respectively. The same goes for periods ending in 9/29/01.
This can not be right, unless they are using some other point than the date ending of a period. Over a period contraction of 6 months, outstanding shares went down only 23 million. Now look at the reported numbers in the 3rd quarter 2001. The same three month period in 3Q/00 shows that outstanding dropped only 1 million shares from 2000 to 2001 where diluted dropped 131 million shares.
By any measure, outstanding shares are what is being bought in these buy backs. In 2001, buy backs merely kept pace with option exercises. 121 million shares were repurchased over the 12 months ending 9/29/01 roughly equalling the share options decline in the period of 125 million (again assuming that the nuimbers are of the same period. If they are out of sync, it can easily be 3-4% apart. For the year ending 9/28/02, 159.7 million shares repurchased and option declines of 92 million shares. The breakage is that many shares are repurchased because the current stock price is low. And what will happen is the shares optioned will go up so that pay is kept up, meaning this may be a temporary situation.
Given these facts taken from Intel's own earnings reports, it is obvious that generally share buy backs are geared mostly to stock option exercises. And as the line headed "Proceeds from sales of shares to employees, tax benefit & other" shows, this revenue was recorded at $279 million for the 3 month period ending 9/28/02. Stock repurchases were $1,001 million for the same period.
That same 3Q/02 report shows that even with a supposed profit of $686 million they lost $273 million in stockholder's equity. Now some of that is the dividends of $133 million. Thus a difference of $826 million still remains or $1,057 million before taxes of $231 million. That is too close to the repurchase number to have no real link.
What have you learned:
1) Outstanding shares are what is repurchased.
2) Rate of repurchases varies with price.
3) Until this year, shares optioned closely balanced with shares bought back.
4) Loss in Total stockholders equity from net operating profit closely matches repurchase costs.
5) Shares outstanding seems to be averaged over a period so care must be taken to get numbers for same length periods.
Pete |
