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Technology Stocks : Novell (NOVL) dirt cheap, good buy? -- Ignore unavailable to you. Want to Upgrade?

To: ToySoldier who wrote (29821)	1/6/2000 1:29:00 AM
From: Theophile	Read Replies (1) \| Respond to of 42771

Employee Options question: Donnacat sent this to me, will post and ask for comments: Reference Bloomberg Magazine, page 22&24, Jan & Feb 2000: Buybacks Bite Back by Mathhew Stichnoth "Increasingly, companies are using stock buybacks to fund management incentive options, in many cases borrowing to do so. " The company that would need to repurchase the highest percentage of outstanding shares to cover their option grants is Novell. Options outstanding (millions of shares) 120.2 Common Shares Outstanding (millions) 335.0 Options as a % of shares outstanding 35.9 Next: Adobe 32.9% Apple Computer 32.8 Parametric Technology 29.1 Dell 28.4 Silicon Graphics 27.9 Cendant 25.5 Fruit of the Loom 21.2 And more on list <<<<<<<>>>>>>> The following is the authors opinion, I do NOT agree. The options are NOT a part of the GAAP liability, and appear nowhere on the financials, as far as I can tell, therefore the method of choice for paying employees. MT <<<<<<>>>>>> The article states the following: "Of all the overrated, underscrutinized, and generally misbegotten actions that company management take 'for the benefit of their shareholders,' share buybacks must be near the top of the list. . . .these repurchases do is siphon assets away from more productive corporate uses. ? they can mask a transfer of wealth from stockholders to management. .. companies taking on more debt to fund buybacks." Recent share buybacks do not reduce the company's shares outstanding - - when options are exercised the stock has to come from somewhere . Issuing new shares is dilutive, so typically company fulfills option obligations with shares it buys on open market which are very expensive today. I do not know if Novell is planning a share repurchase program or if they have sufficient stock on their books to cover options - donna PS long Novell and concerned I would certainly appreciate any comments on this, thanks. Martin Thomas ps I bought more today, more last Monday at the high, and more last Thursday. I got more than I wanted, but I am not complaining, just heavy into NOVL, for my port percentages.