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Technology Stocks : Intel Corporation (INTC) -- Ignore unavailable to you. Want to Upgrade?

To: BelowTheCrowd who wrote (166787)	6/21/2002 4:44:48 PM
From: Amy J	Respond to of 186894

Michael, RE: "There are a few other things that Buffett understands about options, that I think most on this thread don't." Buffett is more of an expert on high-tech than folks here on the Intel thread? Please. Buffett admits he doesn't even understand high-tech. Options play a role in innovation in high-tech. RE: "Options, more often than not, reward you for being early, not necessarily for being great." It can take only one employee at a company to bring in a tape out date and thus hugely increase profits. That's great and has absolutely nothing to do with being early. Buffett's proposal essentially equates to a desire to kill that incentive. RE: "As he pointed out, a person who joined Microsoft early on and got a few options is now a multimillionaire, even if all that person ever did was the minimum necessary to avoid being fired." Buffett has more than obviously never worked for Microsoft or any great high-tech company. Great companies would never tolerate "the minimum", let alone "average." Smart, hardworking companies, like Intel and Microsoft, attract smart, hardworking people. The people that don't wish to work as hard, are attracted to lifestyle companies where options aren't used and cash-heavy comp is. That works for them, and it works for investors too. Puts the less than competitive people into the same company. Easier to avoid that way. RE: "a person who joined five years ago and did amazing work that made a huge difference has seen little or no appreciation." I doubt that's true. I know a lot of Intel people that Buffett claims to be describing here and the ones I know do not feel this way (which isn't to say this current situation isn't a bummer.) But they have vested options as well as unvested and they feel it is simply a matter of time things will turn around. Buffett certainly tries to be an expert about people he doesn't even know. RE: "Options also are HIGHLY dependent on external factors" Do you think an investor would invest in a company where the CEO tells his/her investors, "shucks, the value of your stock always depends upon external factors." No thanks, I'll invest in high-tech companies hell-bent on growth and building value. RE: "an incentive that may have nothing to do with the company's real performance." If a manager in one division didn't have stock options, he would not have the financial incentive to alert a company on what is going on in another division soon enough for the company to take action. RE: " He will correctly point out that stock performance and company performance ...often do so for extended periods of time." This impacts fly-by's. Who needs a fly-by? RE: " Many people made millions on dotcom stock options, even though their companies never produced a thing or made a penny." Options have vesting periods, I believe the bulk of the dotcoms busted before the bulk of the employees took any large gains out, but it is certainly more sensational to claim otherwise. RE: " And anybody who has had stock options through the past few years has seen nothing but a decline in value, even at companies that are growing." This impacts the fly-bys. RE: "In a market like the 70s, when the economy and many companies grew but the stock market didn't move, options would be a HORRIBLE incentive, because they would mostly expire worthless." Making the excuse that options are bad for employees when the stock doesn't grow, while claiming that's good for investors, sounds like he's not aligning the two groups' goals into one common goal. Also, take a look at the growth companies in the 70's. The market actually grew by the way over the decade. RE: "Unfortunately, many people who state that options are essential motivation have never considered the possibility of a flat or long-term bear market, one in which even growing companies can see their stock go nowhere." That's because those same people are MORE COMPETITIVE than what Buffett gives them an ounce of credit for. Competitive people don't make excuses. They thrive on challenges, even tough challenges, and they build value. In fact, they might even be trying to figure out a clever way to take advantage of the downturn - even in the comm market, which is the most depressed market! So, I don't buy Buffett's excuses. RE: "Buffett has lived through those times. Most of the tech business as we know it didn't even exist then." Buffett doesn't even know high-tech. He acknowledges this. And he doesn't know how to count an intangible like Motivation, into the GDP. RE: "will cause employees to demand other compensation schemes" You will find those employees at cash-heavy (low option) lifestyle companies. You're right, the market has a way of correcting things. It works well. Regards, Amy J