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

To: GVTucker who wrote (137127)	7/20/1999 12:26:00 PM
From: Chuzzlewit	Read Replies (1) \| Respond to of 176387

GV, there is no liability in the accounting sense. A company trading in its own stock or derivatives only triggers changes in equity accounts. Thus, the gains that Dell achieved in the past were never considered part of earnings. Furthermore, share buybacks, regardless of how they are financed, are really tax-advantaged dividends. TTFN, CTC

To: GVTucker who wrote (137127)	7/20/1999 7:56:00 PM
From: jbn3	Read Replies (1) \| Respond to of 176387

More on Options GVT, I believe that DELL is selling long term put options and using some portion of the proceeds to purchase long term call options. In recent years, DELL's share price has always increased enough over time for the put options to expire worthless, and the purchased call options to be deep in the money. This has effectively provided DELL the means to leverage its share buy-backs. From page 35, January 29, 1999 Form 10-K: Equity Instruments Indexed to the Company's Common Stock -- Proceeds received upon the sale of equity instruments and amounts paid upon the purchase of equity instruments are recorded as a component of stockholders' equity. Subsequent changes in the fair value of the equity instrument contracts are not recognized. If the contracts are ultimately settled in cash, the amount of cash paid or received is recorded as a component of stockholders' equity. You may notice that the recent filings indicate that DELL has sharply reduced this practice! We can only guess as to whether this has been predicated upon market price uncertainty surrounding Y2K, whether DELL management has some reservations about the rate of future growth, or whether due to some other factors. The use of European-style options allows the company to concretely plan for options expiration at finite intervals and amounts without having to carry large sums of 'idle' cash throughout the life of the options. DELLish, 3.