Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: GVTucker who wrote (174982)	6/8/2005 2:21:51 PM
From: Wyätt Gwyön	Read Replies (1) \| Respond to of 176387

thanks for your clear explanation. this situation seems to imply a Catch-22: to the extent that they continue to buy back shares (offsetting option issues) at prices well in excess of book value, they will reduce share bloat and increase EPS, but at the same time, those earnings used for the buybacks are never deliverable to shareholders (as retained earnings or dividends). so, you can continue to have record earnings, but you can't keep the money; if you want to keep the money, EPS will decline due to dilution and you can't have record earnings (but you can have the money): a Catch-22. in the extreme case, they could have kept the entire $17.2 billion they had earned over the past 10 years, sans buybacks, but declared EPS would be less (even though actual retained earnings would have been 3x higher). is there anything in the new options-related GAAP rules that will change how this is reported? it seems the options issues (and the attendant buybacks) are draining off most of the real wealth of this business.