Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: TigerPaw who wrote (170617)	8/15/2002 5:41:57 PM
From: Sig	Respond to of 176387

Mara B, of the frowning face, met her match in the talk with Kevin R..Hes one cool cat. EOM; Sig

To: TigerPaw who wrote (170617)	8/15/2002 10:00:30 PM
From: Nikole Wollerstein	Read Replies (2) \| Respond to of 176387

stollen from yahoo: Copyright 2002 John Mauldin. All Rights Reserved ".... people are just now waking up to the fact that they've been duped for years by the option game. I use Dell as an example only because it is so clear with Dell in that they not only issue massive amounts of stock options but they also repurchase similar amounts of stock in the market to avoid dilution. This gives me the opportunity to quantify the cost of the game. Companies that only issue options but don't repurchase stocks are still, in my opinion, stealing wealth from non-shareholders but it is harder to calculate exactly what this figure is. For the fiscal year ended February 1, 2002, Dell reported total net income of $1.246 billion. They definitely know how to make and sell computers profitably. Unfortunately, they don't know how to husband those profits so that the poor [investors] who own the stock can reap any benefits. We can see this by looking at the statement of cash flows and the statement of stockholders equity to see how the option buy back program worked. For the year, Dell issued to employees 69 million shares and received total benefits of $853 million (this includes the tax benefit U.S. companies receive upon option exercise). "In the same year, they bought back 68 million shares for a total cost of $3.0 billion. On average, they paid $44 per share and received $12 per share for a realized, book and pain in cash loss... of $2.169 billion. For the year, the loss from the options game exceeded the profit from operations!!! Unbelievable... and as far as I can see, unmentioned on Wall Street. "Investors let Dell get away with this, preferring to believe that the company is making money and working on their behalf rather than acknowledging the horrific truth--- they were mere pawns in a management enrichment program. These are strong statements to be sure; however, has Dell ever paid a dividend to its shareholders? No. Has Dell stock appreciated since July of 1998? No. Has Dell at least grown its book value for shareholders, independent of how the market treats its stock? Again, no. "Though it has reported enormous profits over the last four years, Dell has been unable to grow its book value per share. Why? Because options accounting is a difficult and currently quite imperfect matter and companies have taken advantage of that situation to portray themselves in a far more flattering manner than the underlying truth. Most worrisome is that I can make all these statements about Dell, one of the best run companies around. Imagine how much worse it gets at some other companies."