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Technology Stocks : Advanced Micro Devices - Moderated (AMD) -- Ignore unavailable to you. Want to Upgrade?

To: whortso who wrote (66433)	12/28/2001 1:05:27 PM
From: pgerassi	Read Replies (1) \| Respond to of 275872

Whortso: You are unusually dense! They must buyback shares. If they did not, the diluted shares would rise above the amount authorized. Now there is three ways they can handle this, they could simply increase their authorization, stop granting options or they buyback some of their shares until fully diluted shares drops below the limit. If they did option 2, how many employees would demand higher compensation or worse leave. The latter would happen to most of those employees that are the most experienced and are hardest to replace. The former causes the profit to drop and it would not take much for Intel to be below AMD in EPS. Thus, they can't stop granting the options. If they increase the authorization, the cat is out of the bag wrt to the analysts and the stock would drop requiring more options to be granted or repricing to make it back. In that case the price drops are severe due to the obviousness of the amount of options granted and the dilution. Thus, Intel's only recourse is to hide the costs from individual stockholders by handing it under the table by repurchasing the stock. This just shows how insidious this off book employee compensation is. Full disclosure would bring this to light and placing of the cost against earnings by GAAP, would close this loophole permanently. Even you could not argue that this doesn't reduce real profits. Pete