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Strategies & Market Trends : Roger's 1998 Short Picks -- Ignore unavailable to you. Want to Upgrade?

To: dfloydr who wrote (7379)	4/19/1998 11:20:00 PM
From: Roger A. Babb	Respond to of 18691

Floyd, investors are being snookered by these dilutive stock option plans. Again using CTXS as an example, there are 16 million shares already reserved for options (compared to 41 million shares outstanding) and management has requested the right to issue up to 90 million more shares "without further shareholder approval". Most investors don't realize that you must deduct the "dilution rate" from the earnings growth rate in order to compute the EPS growth rate. In the CTXS example earnings must grow 36% just to keep EPS from declining, even more if new shares are approved. Even professional analysts use the current number of shares when projecting growth in EPS, forgetting that the share total is also growing. The analyst report on CTXS posted tonight on this thread is a case in point.