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

To: Elmer Phud who wrote (178360)	6/23/2004 3:06:27 PM
From: rkral	Read Replies (2) \| Respond to of 186894

OT .. elmerp, re "Lost in your analysis is that Intel is still buying back more shares than exercised or otherwise disposed of by employees. " Huh? I just posted the buyback-to-exercise ratio for each of the last 8 years .. plus the average. Did I say, explicitly or even implicitly, that the ratio was less than one? And the existence of a share buyback program is not necessarily a good thing. A company can pay too much for the stock .. just like you and I can. Ron

To: Elmer Phud who wrote (178360)	6/23/2004 8:28:26 PM
From: TimF	Read Replies (1) \| Respond to of 186894

Lost in your analysis is that Intel is still buying back more shares than exercised or otherwise disposed of by employees. Poorly thoughtout posts by others here have claimed that the buybacks were simply a direct transfer of wealth. The option grants are in a sense a transfer of wealth but only in the same sense that paying employees cash transfers wealth to them. You are giving them something valueable that increases their wealth in exchange for their services. The grants themselves do not directly reduce Intel's wealth but they do reduce the wealth of other shareholders. The value of the work the employees provide might more then make up for that decreased wealth but the options grants considered in isolation do decrease Intel shareholder's wealth. As long as the employees are not overpaid the work they do should more then make up for that decrease. If they are overpaid then it would be a problem whether they where given too many options or too much cash. The buybacks decrease the cost of dilution but they have a direct cost on Intel. The options grants combined with the buyback of the same amount of shares has a net effect that is similar to paying the employees cash in the first place, but it might get more favorable tax treatment. Also it allows Intel to shell out the cash in the future for work done today, and it pushes some of the risk on to the employee, but OTOH the employee probably gets more total compensation then if he was paid just cash. Intel has apparently been buying back more shares then they grant lately but those extra share buyback can be considered in isolation from the employee compensation. Tim