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To: whortso who wrote (66323)	12/26/2001 9:40:44 PM
From: Joe NYC	Read Replies (2) \| Respond to of 275872

whortso, you're still looking at this wrong. What was the cost of the shares exercised this year and how would you know? You will have to go back at least 5 years, maybe more, and find the cost Intel paid at that time. The shares exercised this years are not the shares purchased this year. They are the shares bought 5 years ago. The shares purchased this year will be the ones exercised 5 years in the future. Are you saying that Intel, as of today, repurchased #of shares that is equaled to all the options ever exercised, and all the potential exercise liability? Can you document that? Suppose your hypothesis are correct, and Intel buys shares ahead of time, not after the fact (as every else understands it), how does Intel know today if the shares will be exercised? Joe

To: whortso who wrote (66323)	12/27/2001 4:05:25 PM
From: pgerassi	Read Replies (2) \| Respond to of 275872

Dear Whortso: Do you not know how the cost of options are calculated for the stock buybacks? Take the cost of the shares needed to keep fully diluted shares under the cap decided by the shareholders (its a number of shares limit). That is given for this quarter before the options are granted (it is required to assume that all options granted will be vested). For those options being exercised this quarter (they were granted previously), the base price of the shares are paid by the employee to the company and this shows up as other income (Intel shows this as revenue in the earnings statement (just another "good for me, I include, bad for me, I exclude" shenanigan by Intel)). So the revenue received by Intel for the base price of the share exercised is already in profits but, the cost of those shares is not. If options are not exercised, the share buybacks do not need to be as extensive as the dilution does not happen as much. What Intel does is repricing the options so they will be exercised or granting even more options to keep the old amounts the same. Thus, the share buybacks in any quarter covers just those options that Intel figures will be exercised in the future. The revenue was already recognized but, the costs are not and show up in the share buyback costs (off GAAP earnings). Pete