No, I was talking about something different. MS tends to pay a somewhat low wage for the industry, but grants extensive stock options to employees. The costs associated with that are treated differently than payroll expense, but they are a form of payroll expense. (Note: this is standard practice for most tech companies, but I think MS numbers are fairly extreme).
For the last fiscal year, from the 10K at EDGAR, we have
Net income - 3,454 million
Earnings/share - 2.63
Stock buybacks for employees exercising options 3,101 million
Net income treating this as a payroll expense - 353 million
Earnings/share - 0.27
So, I was wrong. Actual earnings are 1/10th stated earnings (for the quarter ended September, they actually ran at a loss).
Also, here's a quote from the 10K
The market value of all outstanding stock options was $30.2 billion as of June 30, 1997. Microsoft enhances its repurchase program by selling put warrants.
Note: These stock buybacks do not enhance the value of the stock by retiring shares from circulation. They're given to employees who can then resell them.
Some day they'll go down, and hard, but that day may be a long way off.
I think YHOO is way overvalued, but I don't dare short, and the puts are awfully pricey.
-Russ |
