Bob Brinker: Market Savant & Radio Host Message Board

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Strategies & Market Trends : Bob Brinker: Market Savant & Radio Host

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To: Investor2 who wrote (5201)	5/28/1998 12:52:00 AM
From: Skeeter Bug	Read Replies (1) of 42834

i2, this is clearly a difficult issue to resolve with no easy fixes. i'm not sure i have a good fix as the numbers that forbes used to "prove" msft was losing money seemed bogus. i'd bet nothing is done about it. sgi was recently put up as an example where this options "leverage" blew up in everyone's face. the stock went down, the employees demanded cash or left and the formerly higher eps that didn't reflect ALL employee compensation now does. the eps are said to be under whelming. i don't know how accurate a portrayal of sgi that is, but that is how the theory goes anyway. ibm is often touted as a MAJOR player in this game. so much so that they borrow large amounts to buy back their stock and issue lots of options. if their stock ever goes down consistently and employees demand cash while paying interest on that debt, look out below... buyer beware, as always.

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