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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Knighty Tin who wrote (27960)	5/5/1998 9:25:00 PM
From: Russ	Read Replies (1) \| Respond to of 132070

I just saw that Forbes article. I've been telling anyone who will listen that Microsoft's numbers were done with a lot of accounting tricks, and if they put option employee compensation in their P&L they'd show a loss, but nobody noticed or cared. Do you think now that Forbes has it on the cover there might be a drop in MSFT price? (Is it time to buy some puts?) One thing not mentioned in the Forbes article, but mentioned in MSFT 10-K, is that in order to cut the amount of funds spent repurchasing stock, they've been refinancing some of the stock repurchases by selling put warrants. MSFT has about 2 billion in exposure on them. So a bear market will not be good news for MSFT. But hey, they've been selling put warrants like that for years, and they've always expired worthless, and we all know that MSFT stock can only go up, never down, right? <G> -Russ

To: Knighty Tin who wrote (27960)	5/5/1998 11:58:00 PM
From: AmericanDane	Read Replies (1) \| Respond to of 132070

On the other hand, when the earnings go south and the options in danger of expiring worthless, they reissue them at lower exercise prices with the rationale they won't keep their key folks without them. -Dane

To: Knighty Tin who wrote (27960)	5/6/1998 12:07:00 AM
From: Mike M2	Read Replies (1) \| Respond to of 132070

Mike, about that Forbes article ho ho ho. There was not much reaction when Barron's did the options accounting scam story in nov 96 with Martin Barnes of BCA. These numbers should be an eye opener but not fer de manic bulls. I let my subscription lapse on Forbes and all main stream bus. rags but will check this one out . Forbes is one of my favorites. There is now disclosure in de footnotes but people don't read those they look at the cover-looks impressive on the coffee table-g- Mike

To: Knighty Tin who wrote (27960)	5/6/1998 5:10:00 AM
From: Skeeter Bug	Read Replies (2) \| Respond to of 132070

mike, this is the most thoughtful analysis of wall street that i've ever seen. these guys are RAZOR SHARP ;-) ENJOY :-) mfmag.com

To: Knighty Tin who wrote (27960)	5/6/1998 11:40:00 AM
From: Thomas M.	Read Replies (2) \| Respond to of 132070

That sounds to me like she took MSFT's entire options liability, accumulated over the last 10 years, and applied it to one year's earnings. It sounds like she's mixing balance sheets and income statements. Am I missing something (like a brain -g-)? Tom

To: Knighty Tin who wrote (27960)	5/6/1998 3:29:00 PM
From: Russ	Read Replies (2) \| Respond to of 132070

I read the article. The numbers its based on, from Smithers and Co, were the basis of the cover story on the Economist 2 weeks ago, America's Bubble Economy. (Of course, no one pays attention to the Economist, because the writers are 1. pointy-headed intellectuals and 2. furriners) It's nice to see more press on that, but I think bulls will all ignore it. What was very interesting was that MSFT was in almost every table but is never mentioned once in the text of the article. Look up MSFT in the index and that article isn't mentioned. Forbes has always given MSFT great press, and I thought that article might have something critical about MSFT, but I guess that's against Forbes policy. Question: When the bear market hits, and the options MSFT has written expire in the money, and MSFT has to make good on them, what do you think the headline will be? Currently they have exposure to buy approx 2 billion worth of stock at 62 - 65. If the stock is at 40, will the headlines be MSFT takes 2 billion loss in options gamble MSFT loses 800 million in derivatives strategy or MSFT announces 2 billion stock buyback (with a line in the final paragraph saying they're buying 1.2 billion worth of stock for 2 billion)? -Russ