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

To: Elmer who wrote (72872)	9/23/1999 9:15:00 PM
From: Bill Jackson	Read Replies (1) \| Respond to of 1571432

Elmer, Intel's buying and selling in the market activities are independent of any option activity by employees. I am not even sure they will allow Intel to do some things?, it beats me. However with or without the employee option actions Intel can make $ by sale of puts/calls etc. A company is in the rare position of having a deep paper pocket where puts/calls are concerned. I am not sure if the SEC puts limits/rules on this activity by a company with it's own shares Bill

To: Elmer who wrote (72872)	9/24/1999 11:00:00 AM
From: Kevin K. Spurway	Read Replies (2) \| Respond to of 1571432

Re: "Intel sells a put and gets a premium. The low ball puts get assigned on a dip and Intel buys the shares at say $60. Next April, Intel grants those same shares to employees at the new fair market value of $80. Some time later, the value goes up and the employee exercises the options. Does the option exercise sale get reported as profit that quarter? Seems to me Intel makes money." When Intel is assigned on the put and buys the stock, this is the corporate finance equivalent of a cash dividend (the only difference is tax consequences to the investor). Intel doesn't make money on shares it holds in treasury if the stock rises--rather, the relative value of the company per OUTSTANDING share rises more for a given increase in market cap than if the buyback had never taken place. When an Intel employee exercises his option, existing shareholders are diluted to a greater extent than value is replaced in the company (payment of the exercise price to Intel). Intel does not make money on the transaction. The shareholders (net) lose value as sure as if the employee had been given a raise instead of the options. The only difference is in the accounting. That being said, I think stock options are a necessary and beneficial incentive, and I'm sure Intel's plan is quite fair. Kevn