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

To: Michael Bakunin who wrote (97219)	1/23/2000 1:10:00 AM
From: Process Boy	Read Replies (1) \| Respond to of 186894

Micheal - ref: From you link: What Happens Now? The delayed effective date and two-stage transition approach have caused many who oppose the proposed change in accounting to continue to hope the Board's tentative conclusions are modified before expense recognition provisions become effective. These commentators would be pleased to see a final standard that incorporates only the proposed disclosures, and many will undoubtedly lobby the Board for this outcome. Meanwhile, a large number of employers have announced their intentions to reduce or eliminate stock option plans in light of the Board's proposal. The Wall Street Journal recently reported results of a survey of 500 start-up companies in which 90% of the respondents indicated that a requirement to deduct stock-option values from profits would prompt them to stop issuing options to most employees other than top executives. Consultants believe stock option plans provided to top executives are less likely to be eliminated because the performance of these executives is most influenced by stock-based compensation. The Board responds to these assertions by arguing that if stock options provide real economic benefits, companies should reduce stock-option programs only if the cost of providing this kind of compensation exceeds those benefits. Further, unless companies measure and report the cost of options, they can not evaluate the efficacy of stock option plans. Oct 1993 This went far in six+ years, didn't it? The amount of grass roots groundswell of companies not granting stock options is overwhelming. And Warren Buffett has absolutely no holdings in companies that grant stock options. PB

To: Michael Bakunin who wrote (97219)	1/23/2000 5:22:00 AM
From: JDN	Read Replies (1) \| Respond to of 186894

Dear Michael: I am a retired CPA and have been retired for 9 years now. However, this options arguement was going on even then. Here is the problem IMHO. Accounting measures HISTORICAL costs not future costs. Options are typically granted at the current fair market value of the stock, thus at that time they are valueless or you might say costless. You might argue that ok, but if they appreciate ie stock price goes above the option price then they do have value. That is true but there was not "cost" to the corporation. The "cost" comes in diluting the stock of all shareholders. And, that is so recognized, remember you have "Primary" earnings per share (that is basically current weighted average shares outstanding divided into earnings) and "Fully Diluted" earnings per share (that is the above plus "common stock equivalents" which are potential shares which may be issued). On top of that you also have full disclosure required in the footnotes (which are as basic to the financials as the balance sheet IMHO) of all options. So this answers Mr. Buffet's comments also. Now, that all being said, it has long been my opinion the the Tech industry does tend to abuse stock options. I think it all started years ago when Techs had little cash flow to fund current salaries and had to offer something to attract good executives. Now I look at their salaries and wonder why they also need such lucrative stock option plans to boot. However, at least in the better tech stocks they go into the market and buy shares to help fund their plans. JDN

To: Michael Bakunin who wrote (97219)	1/23/2000 11:16:00 AM
From: Elmer	Read Replies (2) \| Respond to of 186894

Re: "I like the way Warren Buffet put it: "If options aren't a form of compensation, what are they? If compensation isn't an expense, what is it? And, if expenses shouldn't go into the calculation of earnings, where in the world should they go?" I'm still trying to find out where this transfer of money takes place. Intel buys back their shares on the open market at a discount by the use of puts, then grants those same shares to their employees at fair market value. Looks like a push to me. Other than the loss of use of those funds prior to actual exercise, where is the loss to Intel? EP

To: Michael Bakunin who wrote (97219)	1/24/2000 6:57:00 AM
From: nihil	Read Replies (1) \| Respond to of 186894

If options aren't compensation, what are they? Now we see why Buffet's performance has been falling off. He doesn't understand performance incentives. Incentives are not costs, because they cost nothing unless performance increases. Some businesses seem to think that one can save money by not paying sales commissions (remember DEC? and GUM?). Options are only costs if the stock price goes up. You never hear people whining about the cost of options at AMD. The only thing stockholders complain of is the repricing of options at AMD. I think study will show that Intel's commitment to paying options not only to management, but to engineers, and then everyone has contributed to, and perhaps even caused the "new economy." Noyce and Moore were eager to innovate and live by their employees wits. Engineers got virtually nothing for their inventions (as Noyce and Moore had not been enriched at Fairchild, even though they (with others) started it.) I can think of a perfectly simple test. Please, someone, trot out a company that keeps all profits for stockholders and top management, and also has one of those first quadrant rectangular hyperbola growth curves. Just one!