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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Bull RidaH who wrote (33408)	11/14/1999 2:09:00 AM
From: Casaubon	Respond to of 99985

Can someone please provide the counter-argument why options exercises should not be expensed. Go to the SEC Edgar database at www.sec.gov and select Microsoft's 10K report for the year ending 6/30/99 that was filed on 9/28/99. Print off the report, which is 81 pages, and refer to the cash flow statement on printed page 63. On this statement is an item titled "stock option income tax benefits" with the amount of $3.1 billion. What this means in plain English is that Microsoft's employees exercised stock options during 1999 with a value of $9 billion in excess of the exercise price. This amount is included as ordinary W-2 wage income to employees, even though they do not sell the stock, because the tax is triggered on the day employees exercise and take ownership of the stock. This $9 billion in stock option wages to employees also allows the company to take a tax deduction for the same amount or $9 billion since the IRS views this as wage expense. Since Microsoft is in a 35 percent tax bracket, a $9 billion deduction results in a cash flow impact of $3.1 billion. Simply put, Microsoft was able to pay $3.1 billion less in taxes by taking a wage expense deduction that is never charged to earnings. ...It is truly disappointing that Mary Jo did not report any facts so that readers could understand the study without having to link to the web site. Key things like the fact that employees pay tax at ordinary income tax rates when they exercise stock options, even if they do not sell the stock. Even though this is ordinary W-2 income to employees, and Microsoft correspondingly takes a tax deduction as wage expense, this expense is not charged to earnings. Why not say that this amount on which employees paid tax for 1999 was $9 billion and none of it was charged to earnings, even though net income was only $7.8 billion. Of course this is completely independent of the remaining stock option liability of $60 billion. For the full article: billparish.com

To: Bull RidaH who wrote (33408)	11/14/1999 7:51:00 AM
From: donald sew	Read Replies (2) \| Respond to of 99985

Dave, >>>> The best wave read I see since the 10/18 low says we're on the verge of completing the first formidable degree wave up off the low, which would naturally be followed by a wave 2 correction. But this read has a break point close by, and that is 1400SPX. If we get through there, we may have some if not significantly more upside on Monday. If 1400 holds up, then we have to retrace at least 20% of this first wave up off the 1233 bottom... So minimum 1364 SPX as of now. <<<<< Dave the SPX closed at 1396 so the chances of 1400 being broken to the upside is quite likely since it is only 4 spx point, which is about 28 DOW points. I realise the spoos players look for that exact point, but to go without a buffer to nail a significant pivot point - I dont know about that. Keep in mind that the SPX has moved 170 points to the upside. What Im saying is that a reasonable break of 1400 may not negate that senerio you highlighted. What the heck is a 36.2 day cycle. gggggggg Whats ".2", why not just 36. How was that calculated/base on what. My system is not linear so I dont focus on exact price targets. Seeya