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To: Don Lloyd who wrote (645)	11/2/2000 1:06:08 PM
From: Arik T.G.	Read Replies (1) \| Respond to of 686

Don, The company reported net earnings of $1B (lets assume that cashflow from operations is the same), but its number of shares is unchanged, and its net assets are $500 Million smaller then last year because they had to pay for the stock they bought. There is no new asset in the balance sheet which the $1.5B paid for, only avoiding the dilution by new stock arising from employees' options. The function of the $1.5B buyback is the same as $1.5B increase in the wages paid by that company, but it does not show in its income statement as wages would have. This company does not create value, it actually lost $500 Million for that year. Where did the $1.5B difference disappeared into? ATG