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Technology Stocks : Intel Corporation (INTC) -- Ignore unavailable to you. Want to Upgrade?

To: GVTucker who wrote (172052)	12/2/2002 12:55:55 AM
From: pgerassi	Read Replies (2) \| Respond to of 186894

Dear GVTucker: Fact, Intel is buying their stock at a average rate of $1 billion/quarter. Fact, that would buy about 50 million shares of their stock. Fact, the amount of Intel stock over the last few quarters has not changed more than a few million shares despite billions in buy backs. The first conclusion is that somewhere they are selling stock to someone. Fact, they report revenue from options exercised to the tune of $200 million or so each quarter. Conclusion two, the stock being sold is almost all options being exercised. Conclusion three, the stock being bought roughly matches the amount of those shares being sold to option exercisors. Conclusion four, that is the actual cost of those options on an ongoing basis. Given that the revenue from those options being exercised shows up as Other Income/Revenue in the quarterly earnings reports, the costs should show up as Employee Expenses on those same quarterly earnings reports. If Intel did allow their stock to dilute, then those shares being sold to option holders would show up as capital or retained earnings. The total book value would go up but, in most cases, the per share book value would go down. And it still would be the equivalent of a loss to the original shareholders. And the shares outstanding would go up sharply. Which is not occuring. Intel is trying to eat its cake and have it too. They report the supposed earnings yet remove the book value gained by removing it at the balance sheet. So they get to say they "earned" 12 cents while actually losing 10 cents of book value. I suppose the best way to eliminate this dodge is to require that employees always buy their stock at market. And managers are paid in salary of which half (or some other percentage) of the net (after taxes, health insurance, etc) goes to purchase stock at market rates which can be sold no earlier than X years from now as a condition of their employement (use of some sort of trust equivalent to a 401k plan). This gives the company's management the same pains as a typical shareholder without the distortions in the current system. This would make the dodges currently done by options really impossible without "cooking" the books. Pete