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

To: NITT who wrote (177795)	5/6/2004 9:57:47 AM
From: GVTucker	Read Replies (1) \| Respond to of 186894

NITT, RE: Ron, that argues for disclosure of the detail of the grants, not some value established by a bunch of gamblers. Therein lies a problem. You see, option pricing with the Black-Scholes formula is not "some value established by a bunch of gamblers", it is a three decade old formula that is tested and verified every day in the free market. It works. Thirty years ago there were many people who didn't believe that the Black-Scholes formula was valid, that it didn't properly value options. Those people lost a ton of money. There were a select few people that believed in the power of the model, and they made fortunes back when option pricing was not uniformly Black-Scholes.

To: NITT who wrote (177795)	5/6/2004 10:59:20 AM
From: rkral	Respond to of 186894

OT ... Nitt, re "that argues for disclosure of the detail of the grants" Option info from Intel's 2003 10-K ... Outstanding Exercisable ------------------------ ----------------- Exercise(range) Shares Life Exercise Shares Exercise $ 0.01-$17.40 115.4 3.0 $ 8.57 94.3 $ 7.13 $17.41–$20.17 193.6 6.3 $ 18.48 103.2 $ 18.34 $20.23–$24.35 263.1 8.0 $ 22.38 37.6 $ 20.97 $24.37–$31.35 126.6 7.1 $ 28.63 46.9 $ 26.44 $31.37–$45.16 70.4 7.1 $ 37.06 30.5 $ 38.46 $45.96–$87.90 81.0 6.3 $ 61.96 15.0 $ 63.74 ----------------------------------------------------------- Total 850.1 6.5 $ 25.54 327.5 $ 20.53 IMO that's already more detail than most people care to deal with. You want more? re "not some value established by a bunch of gamblers" Agreed that there is a bit of gambling involved, but it's the use of options, not in establishing a value for them. re "there will be a much greater opportunity for companies to "fudge" the numbers" To establish the value per option pricing models, e.g., Black-Scholes, several estimates must be made. The opportunity to make such estimates pessimistically or optimistically, particularly re stock price volatility and option life, is hardly an excuse for not making them and not expensing IMO. re "a greater opportunity for all those lawsuit mills to bring investor lawsuits claiming the expense numbers were incorrect" I've seen no evidence for such conjecture. It's a red-herring, a scare tactic espoused by the anti-option-expensing crowd IMO. You've apparently swallowed the Craig Barrett line .. hook, line, and sinker. Ron