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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: Burt Masnick who wrote (72867)	9/23/1999 5:57:00 PM
From: Bill Jackson	Read Replies (1) \| Respond to of 1571401

Burt, If the employee has options at $1 and the SP is $100 and an employee has 1000 options. He gives Intel $1000 and gets 1000 shares and then sells them in the market. Intel gets $1000 and the employee gets $100,000, less his $1000= $99,000. If intel buys those shares(from the general pool of shares on the market) They pay $100,000 and have received $1000 from the employee, for a net cost of $99,000. The employee has been enriched by 99K and Intel deriched by 99K, shares outstanding are the same. If the options are above market price then the employee would lose money and Intel be enriched...so he would not use his options, cheaper in the market. Bill

To: Burt Masnick who wrote (72867)	9/23/1999 5:59:00 PM
From: Ali Chen	Read Replies (1) \| Respond to of 1571401

<If they bought 1.5 billion $ worth of stock and kept it (which is what I think really happens, by the way), they get back the 1.5 billion in cash. What's the point?> No, they got back nothing and keep nothing. Intel buys stock and give it away to employees, instead of salary. This is non-accountable form of labor compensation. They get back only the exercise price, which I am sure is already somewhere in income books. The $1.5B is the difference Intel paid out of pocket. Essentially your pocket, if you wish :)

To: Burt Masnick who wrote (72867)	9/23/1999 6:10:00 PM
From: Gopher Broke	Respond to of 1571401

I don't see a problem with the process. The company either - retains the shares unallocated, effectively an investment in itself - allocate them to employees as share options, effectively setting a sale price at the time they issue the options - a net zero transaction provided the option price is the same as the repurchase price - liquidates the shares, which reduces the total number outstanding and so effectively distributes the money as a capital gain to existing shareholders. Either way the company is arguably investing its profit to the benefit of its shareholders. The only question I have is at what point does the "innocent" repurchase become of such a significant proportion of the float that it compromises the true market valuation of the company?

To: Burt Masnick who wrote (72867)	9/23/1999 6:31:00 PM
From: kash johal	Read Replies (2) \| Respond to of 1571401

Burt, Re:" If they bought 1.5 billion $ worth of stock and kept it (which is what I think really happens, by the way), they get back the 1.5 billion in cash. What's the point?" I am sorry but u are wrong. When a company buys back stock it becomes treasury stock and is effectively retired. The company can at some later date decide to issue stock to the market. But it is much more complicated than an individual trading. The buyback does reduce the total oustanding number of shares though. The 1.5bn goes into the pockets of the folks who sold the stock to Intel. In a perfect market a company buys back 10% of its stock, its stock price should increase by 10% as the companys overall value has not declined. So it is a net zero transaction except for the fact that $1.5bn has disappeared. regards, Kash