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To: Jorj X Mckie who wrote (4968)	10/4/2002 4:03:59 PM
From: Techplayer	Read Replies (1) \| Respond to of 57110

JXM, Dumped LSI for even money including commissions and went flat into the weekend. Stressful but profitable day. I am glad that it is over. <g>

To: Jorj X Mckie who wrote (4968)	10/4/2002 4:35:20 PM
From: MulhollandDrive	Respond to of 57110

siliconvalley.com Cash for options popular at Siebel By Mark Schwanhausser Mercury News Nearly 3,400 Siebel Systems workers have voted with their pocketbooks. They gave up long-shot stock-option payoffs for a sure thing: trading in nearly 90 percent of their eligible ``underwater'' options for $1.85 a share in cash or stock. Siebel's offer to buy back its options will trigger an estimated $56 million charge to the software company's third-quarter earnings, which will be reported at mid-month. Siebel initially had predicted the deal would cost nearly $64 million. Stock options typically give employees the right to buy company stock for 10 years at a price set on the date of the grant. If the stock price rises above that price, they can buy the stock at a discount. If the price drops, however, the options are essentially worthless or ``underwater.'' Leading the way Up to now, Silicon Valley companies have tended to reprice or exchange options when stock prices tank. But Siebel could be a pioneer as companies struggle to satisfy workers who have lost hope that their boom-time options will ever pay off. Last week, for example, graphics-chip maker Nvidia offered a similar deal despite a potential $66 million charge. ``Nobody wants to be first, but once someone does, they follow them,'' said Matt Ward, who heads WestWard Pay Strategies, a San Francisco compensation consulting firm. ``Basically, we have a lot of lemmings out there, and they will follow Siebel into the sea.'' Under its innovative deal, San Mateo-based Siebel offered workers $1.85 a share for every stock option with an exercise price of $40 or more. Those with pay-outs less than $5,000 would get cash. The others would receive Siebel stock, half of which could be sold immediately. Top executives and directors, including Chairman Thomas M. Siebel, were not eligible. In a report filed with the Securities and Exchange Commission on Thursday, Siebel said 1,390 workers accepted cash totaling nearly $4.5 million before taxes. About 2,030 other workers exchanged 25.6 million options for 5.3 million shares of stock, after accounting for withholding taxes. Siebel's stock closed Thursday at $5.53. That's down 37 percent since Siebel made the offer Aug. 29, and it's down 85 percent from its 2002 peak in January. `Pragmatic move' Despite the $56 million earnings charge, Siebel's option buyback was a ``pragmatic move,'' said Bob Austrian, a software analyst for Banc of America Securities. For one thing, Siebel eliminated options that one day could have diluted shareholder holdings by 14 percent. But more important, it was a way to buy back employee morale. The Siebel workers who declined the trade-in offer won't get a payoff from their options unless Siebel's stock climbs seven to 20 times in value over the next eight years. Although Siebel stock rocketed 29-fold in just two years in its heyday, the 3,400 workers who accepted the deal apparently doubted Siebel's prospects during this protracted bear market. ``I suspect employees see this as godsend,'' Austrian said. ``In a sense, they've reduced the uncertainty in the equation for employees. They're giving away long-shot odds of big money in exchange for certain odds for something tangible but smaller.'' That's not to say employees have lost faith in stock options altogether, said consultant Ward. ``I think it's a referendum on underwater stock options. I don't think anybody objects to getting new ones going forward.'' --------------------------------------------------------------------------------