Bill, I am no Dell fan, by a long shot, but Forbes was a bit off on their story. Yes, Dell did make a lot of money selling Put Warrants, not puts, but it didn't go into income. It goes directly into capital the way regular warrants do. Now, they do earn interest on that cash they get paid for the warrants, and that amounts to about $180 million a year and that does go into the income statement. That is equal to more than 10% of last year's net income, so it is not insignificant. But it is not as big an income boost as Forbes would have us believe.
BTW, the SEC sent out letters to the cos. that are the most offensive with creative accounting. I don't know what was discussed, but I do find it an odd coincidence that Microsoft, Dell and Intel all decided to curtail their sales of new put warrants after receiving that letter. <g>
Best,
MB |
