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Technology Stocks : Wind River going up, up, up!
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To: Michael Greene who wrote (3317)6/23/1998 4:44:00 PM
From: J. Kerner  Read Replies (2) of 10309
 
Re: FAS 123

Michael,

The three main factors which influence the FAS 123 disclosure is 1) Stock appreciation and 2) Number of vested options and 3) Time remaining until options expire.

Concerning the first factor, Wind has had a dramatic increase in their stock price over the last 5 years. The only valid comparison you could make would be with other companies with similar runups of over 1000%. Companies that such as PTEC, ADPT, and RSYS are over 60% below their highs. Therefore, their options will not not affect Pro Forma earnings as much as WIND.

Another problem with comparing Wind's FAS 123 disclosure with other companies is you need to take into account how many options were exercised over the year. For example, if company 'A' exercised all their vested options this year and company 'B' exercised none, then company 'B's FAS 123 effect would look quite large while company 'A' would have no effect at all. If you look at number of shares outstanding for WIND, you will see the number has been dropping. That means there are not many options being exercised and most of the option activity is being reflected in the FAS 123 disclosure and not in higher outstanding shares.

I hopes this helps clarify the situation with FAS 123.

Regards,
Jason
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