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Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: GVTucker who wrote (137097)	7/20/1999 7:56:00 AM
From: arthur pritchard	Respond to of 176387

gv: <european, not domestic put exercise> Do you know whether this has been the case with dell for a long time? Your observation is very interesting, to me. And if they are taking the premiums for income, then I assume they are competing/trading in the open market through goldman sachs, for the actual stock repurchase shares??? Is this type of (hypothetical)short term trading performed for a client company like dell, within a company such as goldman sachs, within Dell, or for regulatory or conflict of interest reasons, would this be done in an entity legally isolated from either of the above. Finally, do you know whether this is done by any other companies; for example, would ibm, msft, intc likely be doing the same?TIA

To: GVTucker who wrote (137097)	7/20/1999 11:55:00 AM
From: jim kelley	Read Replies (1) \| Respond to of 176387

European options are preferable for a stock buyback program because the buyback can be scheduled. American options can be exercised at anytime which may prove inconvenient for DELL. By using European style options DELL is simply scheduling the buyback of its shares. This buyback occurs when the options expire. The options are by that time deep in the money and the stock will be delivered to DELL at the exercise price at expiration time. DELL gets the premium up front and can draw interest on it. The premium plus interest offsets the exercise price and reduces the cost of the shares bought back.

To: GVTucker who wrote (137097)	7/20/1999 12:14:00 PM
From: Chuzzlewit	Respond to of 176387

I disagree. Since European style options can only be exercised at the expiration of the option they allow much more certain cash management. The sale of put options finances the stock repurchase program. In any event, the cash received from the sale of these options is not included in the income statement. I believe that these instruments may be considered detachable put warrants, and according to Wiley GAAP 99: A detachable put warrant can either be put back to the debt issuer for cash or can be exercised to acquire common stock ... these instruments should be accounted for in the same manner as mandatory redeemable preferred stock. The proceeds applicable to the put warrant ordinarily are to be classified in equity ... In the case of a put warrant with a price substantially higher than the value assigned to the warrant at issuance, however, the proceeds should be classified as a liability since it is likely that the warrant will be put back to the company TTFN, CTC