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Technology Stocks : All About Sun Microsystems
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To: Kal who wrote (5746)11/20/1997 12:57:00 PM
From: Robert Ling  Read Replies (1) of 64865
 
As a PBS service to readers, here is a revelation about MSFT and earnings with the effect of stock option plans thrown in. Mind you, all companies with option plans are affected by this to varying degrees, some seemingly more than others.

"In the first quarter of 1997, Microsoft spent nearly twice as much on buying its own shares (US $2b) than the company actually earned (US $1.04b). In turn, its employees gained $730 m by exercising options. Had the company paid that amount in salaries, its earnings would have been only a third of what was reported. Microsoft also expensed this US$730m in options and saved US$250m in income taxes, equal to 25% of that quarter's earnings."

Source: A Bernstein study quoted in Canadian Shareowner, Nov/Dec 97 p.12
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