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Biotech / Medical : Biotech Valuation -- Ignore unavailable to you. Want to Upgrade?

To: LLCF who wrote (6923)	8/18/2002 6:30:55 PM
From: Biomaven	Read Replies (2) \| Respond to of 52153

<Dell> Mr. Tsur makes an elementary accounting mistake in that article. He attributes the full effect of something that happened several years ago (the granting of options at the then low market price) to the period in which the exercise actually happened. I believe he also makes a more subtle error by focusing on basic shares outstanding rather than diluted shares, which already take into account the dilutive effect of the cheap options. Let's pretend that Dell did not repurchase shares on the open market - then by his analysis the equity per share would have actually increased because of the option exercises. But the repurchases are like a dividend (as he in fact points out) - shareholders are basically indifferent as to whether the repurchase took place or not. Another way to analyze this is to imagine that Dell just handed out shares of stock many years ago instead of options. How would earnings this year be different? Peter