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Technology Stocks : Intel Corporation (INTC) -- Ignore unavailable to you. Want to Upgrade?

To: Ali Chen who wrote (96331)	1/14/2000 11:25:00 PM
From: Paul Engel	Respond to of 186894

Ail - My Little Screwed Up ScrewDriver Buddy !!!! Re: "who cares of which year were those 313,324 paper certificates that went into Mr. Albert Yu hands: biz.yahoo.com He paid Intel the whopping $1.84 per share. And immediately sold all of them for $60- $70 each. " Obviously, YOU CARE !!! Or you wouldn't have posted it ! Are you a little jealous of Dr. Yu - whose 313,324 shares netted him more money than you can even COUNT in your miserable, puny life time? Paul

To: Ali Chen who wrote (96331)	1/15/2000 4:22:00 AM
From: Saturn V	Read Replies (1) \| Respond to of 186894

Ref -<Probably I should say "some other shares to compensate the pool", if it makes it any clearer for you......Albert Yu paid Intel the whopping $1.84 per share. And immediately sold all of them for $60- $70 each. As a compensation for his valuable service. > Ali your accounting is very confused. You appear to be saying that in 1989, Albert was granted an option for $1.84 , which he exercised in 1999, and sold it for $70. So the cost to Intel was the market price of the option in 1999,i.e , $70 -$1.84 = $68.16. This line of reasoning can lead to absurd conclusions which I will show at the end. The key question you raise is "What is the cost for an option granted to an employee". You cannot take a retroactive cost, i.e. cost in hindsight. The issue is "In 1989, when the option was granted, what was it worth in 1989". The best answer is the market price of the option in 1989. Unfortunately options for such a duration are not available in the open market. But it is possible to calculate the theoretical option price by using the Black-Scholes equation for pricing market options. This price will be extremely controversial. Worse, the IRS will ask that the employee being granted the option be taxed right away in 1989, since this option is a form of compensation. No one would be willing to pay the tax up front for this theoretical number, since in 1989 it was not clear what the stock price would be several years later ,and it becomes a mess. Let me give you a few personal examples which are real and are not made up: In 1981, I sold Intel stock to buy my wife a diamond ring for $6000. If I had not bought the ring, I would not have sold the stock, and today that Intel stock would have been worth more than $2million. So can I tell my wife that I bought her a ring for $2million. Can she take it back to jewelry store and demand a refund for the the same Intel shares that I sold to buy the ring ! Similarly in the 80's, I sold Intel stock worth $50,000 to buy my house. So should I calculate the price of the house by using the replacement cost of the Intel shares I sold then, at the Intel stock price of today. If I do, I will be sick to my stomach. Similarly , calculating the cost of the option as being the replacement cost of the option ten years later is absurd. Retroactive accounting is not valid.

To: Ali Chen who wrote (96331)	1/15/2000 6:24:00 AM
From: nihil	Read Replies (1) \| Respond to of 186894

The stock buyback is simply evidence that Intel knows of no more profitable investment than its own stock. Andy has always said that INTC was underpriced. The best way to push the price up is to buy the stock and not build any more fabs. The new and refurbished fabs are merely to quiet hoi polloi. I would prefer that Intel simply dilute the stock earnings by issuing more stock to optionees, rather than buy the stock back. It seems silly to buy the stock when one can print more really cheap. Sort of like owning an Intel Bank. I love Intel acquiring stock by selling private placement puts to its big investors (Fidelity etc.) Intel needs to get its multiple up to 100 or so that it could do some serious acquisitions. I think it would be neat to buy Lucent while its cheap. I think Nortel would be okay (while its down). Of course, they could buy Citibank or GM or Samsung or Australia or something fun.