Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Michael Bakunin who wrote (74099)	10/5/1999 11:24:00 PM
From: Ali Chen	Read Replies (2) \| Respond to of 1572376

MB, <Sorry, wrong door.> No need to be sorry, the door is right for the money :) As I notice from your profile, you have some math background, therefore you should understand that a single error in a proof is fatal for a theorem. You also should understand that often a wider view on a problem can solve it without getting into deceptively crafted bunch of obscure parameters. Let me point out few of your mistakes. 1. <returning cash to shareholders in the form of buybacks or dividends is not an expense, it is a financing activity.> I am not sure what you mean under "financial activity", but the first part of your statement is simply wrong. The cash is not "returned" to shareholders. The acquired stock is re-issued to internal holders of stock options who immediately cash them out, according to SEC filing of high officials, and also due to the fact that the number of outstanding shares remains the same. 2. <Intel granted options on 48 million shares in fiscal '98, with a weighted average Black-Scholes value based on their assumptions of $17.91 per option -- an $860 million expense not booked under current standards.> Those options are not vested and therefore are not exercisable, and cannot be booked by any reasonable standard. In reality you probably be better off by counting the average value of optiions that were granted 5 years ago and are exercised at $3-$4 range. Even here I am much sure these money are booked is income somewhere :) 3. <Intel realized a tax benefit of $415 million on employee option exercises> Did you try to calculate how much more Intel could save if the stock buy-back would be reported as operating expence and reduce the before-taxes income? 4. <You can fairly conclude that Intel is understating its compensation expenses to the tune of nearly a billion a year,> From siliconinvestor.com I can directly conclude that the "understatement" of Intel's labor compensation expences in 1998 were at least $4.618B. 5. <If you dislike this business decision, fine, but don't pretend it should come out of net income.> I do not pretend anything, nor did I invented the concern. Please address your criticizm to forbes.com - Ali