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Technology Stocks : America On-Line: will it survive ...?
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To: Xpiderman who wrote (10487)6/29/1998 9:35:00 PM
From: Keith A Walker  Read Replies (2) of 13594
 
$500 million new common: Possibly needed to cover options grants to employees. This will be problematic for AOL as employees move to cash in on options that are "way in the money" by now. Will only further dilute earnings.

Forbes had an excellent article on this a few months back and pointed out that AOL was at risk. Microsoft really has a problem on their hands: If all of the options that Microsoft has granted were called, they would have to come up with $10 billion in cash to cover.

Whenever Warren Buffet takes over a company, he cleans out the options grants. The Forbes article makes a pretty good case that the options grant "free ride" may be coming to a close on some of the high-flyers that have used them to attract talented employees.
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