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Technology Stocks : Oracle Corporation (ORCL) -- Ignore unavailable to you. Want to Upgrade?

To: John F. Dowd who wrote (6481)	3/17/1998 2:52:00 PM
From: lml	Read Replies (1) \| Respond to of 19080

Gotta run, John, so I'll make this quick. In reference to your understanding that a holder of the derivative participates 100% in the appreciation of ORCL stock, I assume you referred to the following language in the press release: "The Supplemental Redemption Amount is calculated by multiplying the % change in Oracle Corporation stock over the term of the Note by the $10 principal amount. The Supplemental Redemption Amount may be zero, but will not be less than zero." If you'll note, the % the holder participate, while equivalent to the % appreciation of ORCL stock, is only a % of the $10 face value of the security. So if ORCL trades @ $30 today & trades @ $60 in 2003, the holder receive 100% on his $10 investment, or $10; ML pockets the balance of $20 on the $30 per share appreciation. Hopes this helps.

To: John F. Dowd who wrote (6481)	3/17/1998 2:58:00 PM
From: Michael Olin	Read Replies (1) \| Respond to of 19080

The press release did refer to the issue as callable. Merrill also gets to pocket the fees/comissions for transactions in the derivative without having to move any actual shares of ORCL in or out of their account. A friend also suggested to me that ML may use zeros or annuities to cover the $10/share at redemption and that there may be a different tax treatment for the investor than if they had actually held Oracle shares long term (I have no clue, that's why I pay my accountant). I was advised, of course without benefit of actually having seen the prospectus, that this might be an investment that made sense in an IRA or other tax-deferred plan, but not otherwise (assuming, of course, that ORCL shares are worth more when this derivative is redeemed than now!). Does anyone out there really understand how these work? -Michael