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Technology Stocks : Citrix Systems (CTXS) -- Ignore unavailable to you. Want to Upgrade?

To: Roger A. Babb who wrote (5402)	4/6/1998 6:43:00 PM
From: Biomaven	Read Replies (1) \| Respond to of 9068

Roger, <<As of the Record Date, there were approximately 41,758,060 shares issued and outstanding and approximately 16,924,589 shares reserved for future issuance pursuant to outstanding options granted under the Corporation's stock plans." The PE, PS, and market cap would all be much higher if the 16.9 million option shares were included in the calculation. The PE would be over 70 and the PS over 25, a bit on the high side if my predictions of slowing growth are accurate.>> The diluted number of shares outstanding _do_ reflect the options granted that are currently in-the-money. (The calculation - the so-called Treasury Stock Method - is to assume the exercise of all in-the-money options, and then use the resulting proceeds to repurchase stock at the average price for the quarter). It is true that this calculation understates the dilutive effect of options if the stock price were to increase; on the other hand it overstates it if the stock price were to decrease and a significant number of options are already in-the-money (as is the case here, if I recall correctly). The calculation is most misleading with companies like early-stage biotechs that make a loss from continuing operations - here the options are considered anti-dilutive and ignored. Peter

To: Roger A. Babb who wrote (5402)	4/6/1998 7:06:00 PM
From: David Lawrence	Read Replies (2) \| Respond to of 9068

Roger, I believe that vested, in-the-money options are already included in fully diluted shares/outstanding and PR, PS that are stated on that basis. That may be true of vested, not-in-the-money grants too. From a dilution standpoint, the thing that may hurt us is if Citrix repriced outstanding unexercised options when they tanked last year to keep key personnel from leaving. If they did, it was a windfall to those employees and a detriment to shareholders, since CTXS will realize less consideration when the options are exercised. As an aside, I doubt that the proxy filing had anything to do with todays correction - which was pretty much across the board. It wasn't that big a move in comparison to the recent run up. Besides, we don't want to totally wipe out the shorts, and we certainly want to keep the volatility premiums high when it comes time to hedge. :-)