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To: Hong Xu who wrote (18947)	5/8/1998 2:54:00 AM
From: Daniel Schuh	Read Replies (2) \| Respond to of 24154

Hong Xu, dilution isn't the problem, though it could be in principle. Microsoft in general buys back stock to cover options, to hold dilution in check. The numbers are fairly astonishing, though. The -$10billion income figure for '96, accounting for options, and the 44% of $200billion in grants outstanding- that's a lot of money, even by Microsoft standards. As you may know from the other thread, Microsoft does a lot of option plays to "fund the meritorious compensation plan" too. I wouldn't say it's absolutely a problem, you could look at it as a kind of dividend program for the shareholders, as all stock buybacks are. It's just interesting, as are many aspects of Microsoft, something to keep an eye on. Cheers, Dan.