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Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: mepci who wrote (170387)	7/24/2002 10:05:38 AM
From: OLDTRADER	Respond to of 176387

DELL ads are getting sleazy looking -I expect them to start selling coffee cups and ashtrays "logod" with the emblem.Sizzle was never IN and now it has had it's day-Get back to good old Anglo styles and standards!

To: mepci who wrote (170387)	7/24/2002 10:12:05 AM
From: Elroy	Read Replies (1) \| Respond to of 176387

Interesting scenarios. 1. You own 100M shares(all the outstanding). The book value is $100M. Share price is $1. You grant option to employees to purchase 10M at $1. They exercise it. You issue these 10M shares from authorized shares (first into treasury and then to employees). Here there is no loss to shareholders (if you don't count goodwill). I see your point in that the company has added 10M shares to the count but has gained $10M (the value of the additional shares) so SE doesn't change, but the shareholders "harm" is still in the form of dilution. The extra cash balance ($10M) has to be put to use at a rate as good as or better than the companies ROIC in order to make up for the extra shares. But....I don't think that's your main point. Your main point is...... 2. slight variation from above. Stock price went to $10 after the grant of options. Company buys 10M shares from the market. That is $100M cash out from SE. Employees exercise the option. SE gets only $10M. A loss of $90M from SE. A loss of $90M from productive cash from company assets. This is money on which you paid taxes before. You should declare this loss as employee benefit expense. And here I see your point as well. I was just assuming a company would issue treasury stock when employees exercised their options, not go on the open market and retire (and then re-issue) publicly traded stock. Not sure where treasury stock resides on the balance sheet, but if a company has to go on the open market and make up for the difference between the strike price and the market price out of cash, then I agree that seems wrong not to report that cost (somewhere). However, if it is the case that the company is buying stock on the open market then the dilution that I assumed was resulting would.....not result - right? In that case option grants aren't causing dilution. Elroy