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Technology Stocks : Dell Technologies Inc.
DELL 125.97-1.0%3:59 PM EST
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To: Voltaire who wrote (83813)12/5/1998 10:35:00 AM
From: TCBinAugusta  Read Replies (1) of 176387
 
<<When a company gives its insiders more in options and less in salary (a popular maneuver these days), it boosts the stock price, indirectly. By reducing salaries, the company also reduces expenses, which adds to earnings. Higher earnings convince investors to pay higher prices for the stock. THE PROBLEM arises when the recipients of options decide to convert their options into actual shares. This puts more shares into circulation, which lowers earnings per share and makes the stock less attractive. When enough bigwigs sell their shares to reap their rewards, the stock price will fall, undermining the aforementioned buyback. Dellheads will wish the company had sent them a dividend instead of spending the money on internal maneuvering.>>

Interesting comment. However, reported E.P.S. is generally computed on an "as if" basis and assumes that all outstanding options that would be exercised at the reporting date (ie: those that the option holder has a "profit" on) are exercised and the related shares are included in the denominator of the E.P.S. calculation. Therefore, the "insider" options are already factored into E.P.S.. I personally still prefer a stock buy-back to a cash dividend.

TCB, CPA
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