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

To: carl a. mehr who wrote (172993)	2/11/2003 12:18:29 AM
From: The Duke of URL©	Respond to of 186894

Are you concerned with finding out about the stock options? How much of your intel stock do you still own?

To: carl a. mehr who wrote (172993)	2/11/2003 9:21:52 AM
From: herb will	Respond to of 186894

Carl, “revised quarterly earnings” I made a few notes from the following article and will leave it up to you to come up with a "revised" quarterly earnings per share figure for expensing the stocks options. A quote from the article “Even in the absence of malicious behavior, because varying assumptions can be made as to the time to expiration [16] and the stock’s volatility, reported Black–Scholes option values for different firms will be to some extent incomparable Nonetheless, this value is then amortized over the estimated term of the option.” heritage.org A) options are reported as a compensation expense,the fair value method, 1) At their grant date, options are valued using an approved valuation model, typically the Black– Scholes model. [15]This formula is one of the most complex in finance and includes the following variables: a) current price of the stock, the exercise price of the option, an assumed risk-free rate of return, the volatility of the stock’s returns, and the time to expiration. b) this value is then amortized over the estimated term of the option. c) For each year, the annualized portion is charged to compensation expense with a corresponding credit to equity. But this expense is a non-cash expense and is added back to net income to arrive at the firm’s net cash flow. B) Since the true value of the option will not be known until the exercise date, an accounting mechanism is needed to correct for any differences in the estimated and actual values. To allow for this discrepancy, the company accrues a deferred tax asset throughout the term of the option. If the option value turns out to be different from the originally estimated value, the accounts are adjusted accordingly. C) Even in the absence of malicious behavior, because varying assumptions can be made as to the time to expiration [16] and the stock’s volatility, reported Black–Scholes option values for different firms will be to some extent incomparable. Nonetheless, this value is then amortized over the estimated term of the option. Can of worms? Herb

To: carl a. mehr who wrote (172993)	2/12/2003 9:10:16 AM
From: Amy J	Respond to of 186894

Hi Carl, RE: "Intel has the competition beat by miles" Sounds to me like you still own INTC. Welcome back. You had the thread wondering for awhile there. RE: "revised" quarterly earnings per share figure for expensing the stocks options. Using the available figures for the last 3-4 years this should" The value of Options is a % of the Valuation - and that is already counted as a shareholder expense in dilution. Options belong in the cap table or proxy statement, not the income statement. The following is pretty much a repeat of a post of mine on the Cisco thread: Us investors got caught up in a bubble and made a mistake in estimating valuation. That's not Intel's fault, nor does it mean that rules should be created that hurt companies from creating growth. Why create a bad rule that hurts growth, when bubbles only happen every 70 years? Investor's fault if they didn't sell Cisco at 42 (or Intel at 58). No need for Intel to ruin their growth engine because of an incorrect decision by an investor that bought Intel at the peak and didn't recognize a bubble. Investors got excessive - and that includes me. But you're trying to blame a company for an investor judgment error, as well as ruin a good growth engine. Investors should have cut back at the peak. A company should not be charged with changing their operations into slow-growing, dividend-style companies due to investors getting caught up in a bubble. It's important to realize that when an investor gets hurt, it may be because of investor error (in calculating valuation), not the company, and in such cases, of course the options are going to grow higher in a bubble but that's due to the investor's fault, not the company's. So, if fully diluted EPS is hurt due to bubble options, that's still an investor's fault for incorrectly valuating the company. The only question I may try to understand is why the doubling up on the way down rather than a bit of an easing, but everything else looks perfectly fine to me. Regards, Amy J