Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Ascend Communications (ASND) -- Ignore unavailable to you. Want to Upgrade?

To: gbh who wrote (46848)	5/13/1998 9:55:00 PM
From: stilts	Read Replies (1) \| Respond to of 61433

Greg Jung, Further to Gary's research re option info in 10K, if the average exercise price for the 28 million plus options exercisable as of 12/31/97 was $23.40+ per share, that's a lot of money to add to Ascend's coffers upon exercise of those options ($650+ million). Is that figured into your calculations, Greg? Stilts

To: gbh who wrote (46848)	5/14/1998 12:02:00 AM
From: Greg Jung	Read Replies (1) \| Respond to of 61433

Cisco has 5x the number of shares and their dilution rate is a little above 4%. I remember a number of about 3+% for 3com prior to the usrx acquisition, lately its probably too messy to disect. When an employee exercises options priced at 1/2 the going market price, options priced at the bottom of the market cycle (and re-priced) he/she will sell the portion needed to make it a cashless transaction. They then own shares at zero cost, the cost being to the shares in existence (shareholders) and at no risk. As for an ownership incentive, it isn't there, because the main profit has been attained, they will soon get similar options in the near future and if the market takes a beating these options will again get repriced. This "normal" stock options programs in the technology companies is maybe more democratic than the enrichment of Disney Executives but it is still detrimental to the stockholder. If they only have a few million options to grant that is irelevant because they will ask for, and get, more. The only item you can measure is the outstanding balance. The shares outstanding I picked up from the SI profile and I haven't considered the options outstanding. It is a very simplified model but in fact the finances are pretty simple themselves, as there is no debt. The "cash balance" was just picked out of the air, BTW. The worksheet uses a figure of 5% for dilution which I use as a moderation to the 9+% recent history that might be attributable to acceleration of the options from Cascade and Whitetree acquisitions. No doubt as they accrete further the effect of such will be a smaller percentage than this. As I say in note 1), the trailing eps in the worksheet adds up to 0.90 but the pro forma earnings is $1., so the forward estimates are divided by the 0.90 figure. Everything is keyed off of the 0.26 value, incremented by the assumed rate, and then divided by 0.90. In fact they actually lost money in 1997 with acquisition charges, etc. the biggest I noticed was $111 million but there are probably other items to make -$1.50/share. BTW to adjust for the values for -no- dilution instead of 5%, multiply by 1.125 Greg