Good questions- I'll take a shot at answers.
First, Flextronics just did a secondary issue last fall, and sold some bonds, so now actually has cash on the balance sheet (about $90M). The balance sheet is much stronger than last year at this time. I don't expect any equity dilution from secondaries. But the company did issue about 1M shares in connection with the recent purchases of Conexao and Altatron. And there is a fair amount of incentive options out there. I believe though, that my estimate of 22M shares outstanding pretty much includes all these issues. If you want, be conservative, and use 23M shares in the calculations, you'll get similar numbers.
Yes, Forbes finally did an article on executive options. Since Forbes kow-tows to the CEO class, the article is a bit late. Barrons has had some scathing remarks over the last year on the same issue. Its one of the big reasons I dumped my Intel shares and warrants last September. Intel is one of the company's most affected by this "funny business".
The incentive options in Flextronics case are material, and need to be considered, but I believe the bulk of the options are included in the diluted EPS calculations, since almost all the outstanding options are in the money given the big run-up in stock price over the last year. I don't know about new option grants, but will check the 10K and annual report.
Paul |
