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Technology Stocks : Oracle Corporation (ORCL) -- Ignore unavailable to you. Want to Upgrade?

To: brushwud who wrote (17771)	1/8/2003 12:15:14 AM
From: hueyone	Respond to of 19079

I inferred that share repos reduced both cash and retained earnings. Ok, I will buy that. And if companies have to repurchase a lot of shares just to keep my percentage ownership of the company even (because they have issued so many stock options), then retained earnings, shareholder equity and cash is reduced every time they repurchase shares by the amount of the buybacks. The fallacy of looking at earnings reported by these companies, which do not include stock option expense, is readily exposed by looking at this repurchase exercise. If the earnings or free cash flow many of these companies are reporting were really accruing wealth for the benefit of all the owners, why doesn't it stay in shareholders equity instead of disappearing in share buybacks to shareholders who are no longer with the company (even though my percentage ownership of the company may only be staying roughly constant)? Why does Oracle only show 456 million dollars of shareholders equity above and beyond paid in capital in spite of presumably having "earned" billions of dollars? Just like in the Quant Tech fable that I linked above, Oracle has greatly overstated its earnings performance over the years. Much of it has been smoke and mirrors, money that Oracle had to later pay out to departing owners or new owners just in an effort to try to keep the rest of the long term shareholders even in their percentage ownership of the company. Transferring the expense of stock options to share buybacks that do not have to be reported as an expense on the income statements is nothing but a sleight of hand con job on investors in my opinion. If tax law is changed, companies can pay cash dividends instead, which would benefit all shareholders more equally and consistently. Ok, I will buy that too. Thanks for your posts. Regards, Huey