Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : How high will Microsoft fly? -- Ignore unavailable to you. Want to Upgrade?

To: Charles Tutt who wrote (44590)	5/9/2000 12:41:00 PM
From: Harvey Allen	Respond to of 74651

Microsoft's Stock Options Party Could Lose Its Zip By David Pauly New York, May 9 (Bloomberg) -- Microsoft Corp. has been built in large part on stock options. All 34,000 of the computer software producer's full-time employees get options in lieu of higher pay. Historically, the strategy couldn't have worked better. A long line of motivated Microsoft millionaires helped the company capture 90 percent of its market. The U.S. government's antitrust case against Microsoft could change all this. Microsoft shares have declined 40 percent so far this year as the company lost round one of the legal battle. It could take years for the suit to wind its way through the courts - - and the stock could stagnate at its new level. Employees still stand to make huge gains on their options. Microsoft had grants for 766 million shares outstanding last July 31, the end of its fiscal year. The weighted average price at which those shares could be bought was $17.28. Microsoft shares closed yesterday at $69.81. But, obviously, the gains might be a lot less than employees anticipated. After all, they expected Microsoft shares to continue to rise as they have over time. Five years ago the stock was about $10. Their motivation reduced, more key employees might join others who quit recently. In December, for instance, Chief Financial Officer Greg Maffei left to head what is now called 360Networks Inc. Just last week, Nathan Myhrvold, who had been the company's chief technology officer, said he wouldn't return from a sabbatical. Doubling Up Last month, Microsoft tried to combat its stock decline by doubling the number of shares covered by option grants in the current fiscal year. The exercise price of $66.63 a share won't be that attractive, however, unless Microsoft shares recover. If they don't, Microsoft may have to change its pay policy. The company noted in its last annual report that if it had paid cash instead of options in fiscal 1999, its expenses would have been $1.1 billion higher. (The leniency of accountants allows companies to bury this cost of options in the footnotes of their reports.) Until now, Microsoft employees have more than made up for low salaries with big options sales. Robert J. Herbold, chief operating officer, made only $562,465 in cash in fiscal 1999. But in February, he sold 375,000 company shares in an options-related transaction at prices of $101.30 to $102.87 -- or $38.3 million at the average price. Cash Flow Problem Less lucrative stock options could eat into Microsoft's cash flow as well as its employees' morale. The Internal Revenue Service allows companies to deduct from their taxes the amount of capital-gains taxes employees pay when they exercise their stock options. In fiscal 1999, this corporate benefit enhanced Microsoft's cash flow by $3.11 billion. Nobody can predict what will happen to Microsoft's share price. But if it doesn't make a comeback, Chairman Bill Gates and his troops might have second thoughts about their current resolve to fight the government's case to the bitter end. quote.bloomberg.com

To: Charles Tutt who wrote (44590)	5/9/2000 2:31:00 PM
From: rudedog	Respond to of 74651

Charles - no, Champions Forest, near the Champions PGA course... the air handling looks like something Bruce Willis might hide in, if they do a remake of "Die Hard"... industrial grade stuff. This was an area built up in the heyday of the oil boom in the late 70s, "Texas Grand" at its most ostentatious - but plenty comfortable. I bought in '83 when real estate in the area went in the tank after the Oil market collapsed. Sold some MSFT stock to make the down payment, so maybe the price was not such a bargain after all...