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To: Earlie who wrote (24192)	10/4/2000 2:52:07 PM
From: Cynic 2005	Read Replies (5) \| Respond to of 436258

IBM earnings warning will be a tropical storm compared to this impending category 5 hurricane: Put Warrants Prior to the termination of the stock buyback program, Microsoft enhanced the program by selling put warrants to independent third parties. These put warrants entitle the holders to sell shares of Microsoft common stock to the Company on certain dates at specified prices. On June 30, 2000, warrants to put 157 million shares were outstanding with strike prices ranging from $70 to $78 per share. The put warrants expire between September 2000 and December 2002. The outstanding put warrants permit a net-share settlement at the Company's option and do not result in a put warrant liability on the balance sheet. At $59/share, these put warrants or $15 under water - on the average! In the last month or so - assuming that only a 3rd of the 157 million shares (54 mil) were PUT to Microsoft at an average price of $74, in the last month or so - Soft had to shell-out about $4 billion from their cash (too bad they can't print more stock to offset the put warrant exercises). On top of that, the paper loss on these options is about $3 bil. So it is a net $7 billion hit to softy! It is not chump change even for mighty Soft! edgar-online.com They have about $24 bil in cash & eqquivalents. about 1/3rd will be gone if the stock stays this low for some time!