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Strategies & Market Trends : Zeev's Turnips - No Politics -- Ignore unavailable to you. Want to Upgrade?

To: Timothy Liu who wrote (98504)	8/22/2002 2:07:50 PM
From: Steve Lee	Read Replies (2) \| Respond to of 99280

"The earning does not suddenly become negative because of the option." If the company gives away shares at a discount (through options) and that discount is greater than the reported earnings then the company has actually made a loss. It is not accounted for by dilution. It is a loss IMO cos the discounted stock (options) are an employment expense. If you don't provide the discounted stock, you have to pay the employees more or they will leave. So EPS that doesn't account for discounted stock, is not a true reflection of all costs of running the business.

To: Timothy Liu who wrote (98504)	8/22/2002 4:07:44 PM
From: Pink Minion	Read Replies (2) \| Respond to of 99280

Your dilution argument seems to falls apart when you look at companies that buy back their stock. Let's look a DELL which had no dilution last year. They supposedly made 70-80 cents per share last year. Something like 2 Billion in profits. But if you look at their financial statement they used up 1 Billion in cash. Their book value decreased by 1 Billion not increased by 2 Billion. Now why isn't the cost of buying back stock expensed as part of doing business? One or the other needs to be.