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To: saukriver who wrote (24148)	5/4/2000 12:16:00 AM
From: StockHawk	Read Replies (1) \| Respond to of 54805

>>If you and I each own 10% of the water in a glass and you drink all the water, I really don't feel any better if you then give me your 10% of the water in the glass.<< Think of it this way - that glass will be refilled with water every day, and now you get a bigger share to drink every day! The reason most people bought MSFT is because of their incredible earnings power, not their pile of cash. I think Ford has a pile of cash too.

To: saukriver who wrote (24148)	5/4/2000 12:42:00 AM
From: Mike Buckley	Read Replies (2) \| Respond to of 54805

saukriver, I'd like to make some very general statements that might help clarify (mostly for others) the essence of the point you made and its ramifications. When a company sells puts, it does so as part of a share buy-back program. That's because there is always the potential that the shares will be put to the company if the shares drop sufficiently in price. Having been authorized by its board to buy back shares, the management team chooses to sell puts with the hope over the long haul that the premiums received from the sale of the puts will result in a net cost that is lower than buying the shares separate from an options contract. Sometimes it works, sometimes not. I'm not an accountant, so I don't know the required timing of placing the liability on the balance sheet. However, I assume it is required that the puts be mentioned in the notes to the financial statements. Investors should always consider notes equally as important as the columns of numbers because of the implications for the future. Therefore, it's not a huge issue about the timing of when the information moves from the notes to the columns. If puts that have been sold are required to be listed as a liability, there will also be an asset (the value of the common stock) that will offset at leat part of the liability. If the value of the shares is lower than the strike price, the asset will be lower than the liability. Conversely, if the value of the shares is higher than the strike price, the asset will be greater than the liability. I believe it is StockHawk who mentioned that money spent to buy the shares does not decrease top-line revenue. Similarly, the premiums recieved for the sale of the put contracts does not increase top-line revenue. That's because revenue is a line item used only to report the sale of product and services. When you see press releases and SEC filings that mention the after-tax effect of one-time sales of stock, the money that changes hands is reflected in the internal parts of the financial statements that I'm not capable of explaining properly. The context in which you began this discussion is generally more important than all of the above -- concern for cash flow. Your point is that if a company has X dollars that have to be used to buy shares that will be put to them, and if that reduces the amount of cash to such a degree that the company is undercapitalized, it can be a serious situation. That situation will often require that the company take on more debt, sell certain assets that might or might not be criticial to the company's core operations, or reduce stockholders' equity by selling additional shares. Hope this helps. --Mike Buckley