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Technology Stocks : DELL Bear Thread

DELL 117.44

-1.6%

Nov 20 3:59 PM EST

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To: Bilow who wrote (952)	6/1/1998 2:06:00 AM
From: Skeeter Bug	Read Replies (1) of 2578

carl, i believe the options game is just that - a game. companies are transferring employee costs directly to shareholders without passing their income statement and thereby creating an illusion of more profitability than really exists - regardless of the accounting divisions between giving options and buying back stock. imagine a guy giving $15k to a charity and receiving a new corolla. he writes off the $15k as a donation and argues receiving the corolla was a different "transaction." the options game is currently legal and this charity game currently isn't. however, the underlying principle is the EXACT same, imho companies like ibm and dell are now BORROWING money to BUY BACK STOCK to FINANCE THEIR OPTIONS PROGRAM. does it cost the company money to just issue stock? if you received $10 on a $60 stock did it cost you money? it cost you $50. same with the company - regardless of accounting conventions that change with the stroke of a pen. d-day will be when the bear growls. after 2-3 years of stocks declining employees may decide they want cash instead of options. or they leave. THEN the real expense of hiring said individuals will now fall right into the income statement. when that happens, it will no longer be an exercise in accounting conventions, imho. it will be severe losses that were exaggerated very significantly by the current accounting practices. it also gives corporations an incentive toward creative accounting rather than building their business. this is not good longer term - for anybody other than those selling their options into inflated stock prices. jmntbho ;-) btw, i'll have to remember that "to cash" check trick ;-)

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