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Strategies & Market Trends : Gorilla and King Portfolio candidates - Moderated -- Ignore unavailable to you. Want to Upgrade?

To: Jurgis Bekepuris who wrote (91)	10/29/2003 9:39:07 AM
From: hueyone	Respond to of 2955

The stock option issues and executive compensation issues still remain if I remember correctly. Absolutely. Dell has been repurchasing shares at all kinds of prices over the years to offset share dilution from employee stock option exercise. Issuing lots of employee stock options and then repurchasing the shares with company money is a sly way of keeping this employee expense off the books in the company's reports to shareholders imo, all the while keeping reported per share earnings up. Much of Dell's vaunted reported "free" cash flow and earnings has disappeared in to these buybacks even as overall share count has increased. In sum, the company has never retained the supposed wealth that investors thought it was generating. The game did wonders for the stock price though. Here are articles making similar points: Dell's Hollow Share Buybacks fool.com. Snip: Dell's problems are twofold. The first is that the company's employee stock option grants and option purchase plans have been so generous that most of the value created by its business gets redistributed from shareholders to employees. The second problem has been its policy of repurchasing shares at high prices to combat share dilution. Here is another article making similar points that does not require a fool membership: The High Cost of Dell's Stock Option Program thestreet.com JMO and quite a few others', Huey