SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Technology Stocks : DELL Bear Thread
DELL 122.70+0.2%Nov 18 3:59 PM EST
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: Bilow who wrote (908)5/28/1998 1:30:00 PM
From: Richard Tsang  Read Replies (2) of 2578
 
Carl, thanks for posting the data.

What is the purpose of the "fair value" at grant? I have read in this and the other thread that there is no charge to profit at all. I suspect that this value is used primarily for communications to manager/employees of the value on top of their salary. As you have indicated, because the stock price went up, that value also increased substantially, much more than the "fair value". Who is financing this extra cost (on top of fair value)?

If you go to their cash flow analysis and check the financing on equity, you will notice that the cost to buy back shares is 10 times what the employees paid to the company for the shares. The 90% may be the cost that the company is paying, and still not charged to the expense lines. The so called "proforma" numbers reflected the "fair value" of the options AT GRANT, not the actual cost. Hence the effect is minimal. It would help investors understand better if company start showing the actual cost of such program and charging it off profit before appropriation.

This is happening to most high tech companies, not just Dell. The point is, the future liability is huge. Somewhere in the Dell reports I noticed that the average contract cost of share buyback thru their options (calls and puts)is $75 per share. This is double the highest average exercise price shown on the summary you provided. The difference will again not be charged to expenses, but amount to a reduction in shareholder's equity when that repurchase happens.

Just my observations.

RT
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News