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

To: Lee Penick who wrote (39097)	11/6/1997 12:41:00 AM
From: xstuckey	Read Replies (4) \| Respond to of 186894

"I can't remember....are these buy backs made with "earnings", or are they "pre bottom line expenses" and the earnings are still "all" there to continue to grow the company? Makes a big difference to me, and what goes to retained earnings I believe." Hi Lee, Of course it makes a big difference. It is my understanding that the funds used for stock buybacks come from retained earnings, yet are NOT charged against current earnings. They are in fact (since they recur year after year) an inducement to lure and keep employees. This is another way of saying they are a cost of doing business. Why don't we be honest and just call them wages and salaries? They should be expensed, but then the P/E would approach 40. Best Trading, X

To: Lee Penick who wrote (39097)	11/6/1997 8:43:00 AM
From: Charles Skeen	Read Replies (1) \| Respond to of 186894

Lee, RE: <<<Intel used this method to incentivice employees. . >>> Yes, but managing the stock price down would hardly accomplish this. RE: <<<are these buy backs made with "earnings">>> Well, they are made with cash. The buy backs would reduce cash on the LHS of the balance sheet and shareholder's equity on the RHS. No effect on Total Earnings (except to reduce future return from short term investments). Earnings per share should increase, but this is offset as new stock options are issued and employees exercise them. RE: <<<Motivates employees, but very expensive. Intel has massive brain power at HQ, . . . . These are Phd, etc in very valuable fields. >>> With 12,000 employees in R & D (according to postings on this thread), it would require a lot of motivation. One wonders about productivity where there are so many "brain powered" employees in one organization -- must be very frustrating for some at times -- and what happens if the stock price does not continue to uptrend and employees become de-motivated? JMO, Charlie. (not an accountant or up on the latest stock option rules)