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To: Mama Bear who wrote (24711)	10/5/2000 12:12:54 AM
From: LLCF	Read Replies (2) \| Respond to of 436258

<Don't you read this "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." as allowing them to print shares rather than to pay out cash?> I certainly do not... in any case those warrants would be 'split protected' and would increase in # shares 'putable'. Just because it's off balance sheet doesn't mean they dont have to pay for the shares. DAK

To: Mama Bear who wrote (24711)	10/9/2000 10:36:17 AM
From: Cynic 2005	Respond to of 436258

I did read that. But I am really not sure how they can avoid that liability! Ballmer himself hints at using the cash hoard to pay for the stock buys resulting from the put warrants. Say good bye to 50% of the 23 bil cash (Assuming they haven't sold any more puts in the interim) To help pay for employee stock options, Microsoft has for several years bought back shares of its own stock and employed a complicated hedging strategy to soften the impact. Since 1995, Microsoft has made more than $2 billion in fees from selling "put warrants" to investment banks, which give the banks the right to sell Microsoft shares back to the company at predetermined strike prices. Until now, with Microsoft's stock at lofty levels generally above the strike prices, the company has simply collected fees and watched most of those warrants expire worthless. But now, that is no longer the case: As of June 30, the company had 157 million such warrants outstanding at strike prices ranging from $70 to $78 a share. That means Microsoft may have to dip into its cash reserves to buy back stock over the next 2 1/2 years at those levels. That could cost the company $11.6 billion over the next 10 quarters, the company acknowledges. Still, that is money Microsoft could have spent anyway to buy back its stock, and "we've had numerous quarters where we've spent in excess of $1 billion" on buybacks, says Brent Callinicos, Microsoft's treasurer. He adds that those stock purchases aren't accounted for on the balance sheet and won't affect earnings or cash flow, since the company has a huge cash hoard of $23 billion. interactive.wsj.com