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To: wanna_bmw who wrote (151306)	12/6/2001 11:56:00 AM
From: AK2004	Read Replies (2) \| Respond to of 186894

bmw <edited> Ali has a strong case against "validity" of gaap as a valuation tool. I will not make any comments on the numbers since I do not know the details of the repurchase and stock incentive plans. Allow me to illustrate my point though via example. Let's assume no incentive plans that is whatever is repurchased is going into company piggy bank - it is not an accurate assumption, granted. Let say you are a ceo of bmw company and you hold in cash 10% of cap. You are in downturn and you decided to repurchase stocks using half of your available cash to maintain market valuation. Now you have 5% of cap in cash and 5% in stocks. Industry went even deeper into decline of demand and you need to draw from the piggy bank but the value of the piggy bank declined as share value declined. Granted that if the industry would go into recovery your company piggy bank would grow as well so your mean might end up to be the same. The difference is that once you converted into cash into something that correlated with the price itself you changed the risk profile of the company. In risk neutral world that should not make much of a difference but we have a risk averse market. You will be penalized for risk. Regards -Albert <edited> I think that Ali addressed an incentive plan though