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

To: arthur pritchard who wrote (137100)	7/20/1999 10:17:00 AM
From: GVTucker	Respond to of 176387

arthur, RE: DELL and options If you don't mind, my question then is, are there many investment banking houses, with the capability to service an account as demanding as dell? Just out of curiosity, could you name a few? Most of the full service houses can provide this kind of service. Morgan Stanley is particularly active in this area, although Goldman Sachs, Merrill Lynch, JP Morgan, DLJ, et. al. are also more than capable in this area. I guess I would also like to ask you whether you think dell's income from puts was an exceptional performance on the part of the investment banker involved, or has this been as high as it has been, due more to the dramatic action of the stock up through February First of all, be aware that DELL decidedly does not believe that they derive 'income' from put sales. I quote Roy Clason (VP-Corp Communications) directly: "By any definition, Dell does not 'make money' from its stock-repurchase program." I disagree with this assessment, although it is more an issue of semantics than of accounting, IMO. That said, the source of the large 'income' that Dell derives from its options trading is twofold. First, Dell's stock price performance has historically been outstanding. Given that being short a put is essentially a leveraged long position, good stock price performance obviously helps. Second, Dell is much more aggressive than its peers in using options for its stock repurchases. This magnifies the positive impact in the good times.