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Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: Walt Corey who wrote (43895)	5/20/1998 3:08:00 PM
From: Michael Burry	Respond to of 176387

Walt, While I generally agree with your statements, I don't see how they make my statements wrong. Options are a decent tool for minimizing turnover, but far from perfect. This brings up the larger question of loyalty being sacrificed to the options grail, but in any case, the big problem with options is that typically life is smooth as long as the stock price is going up. There's no free lunch, though - of course, ask most Silly Valley employees and they'll disagree. For Dell, the options have been a good strategy, as the stock has gone up and up forever. But IF things don't work out like everyone on this thread seems to think - IF Dell's product does squirm its way down into cheap commodity status, and IF ASP falls off the cliff, then the options game will become a problem, as the share dilution and options repricing ticks off shareholders who start to wonder where their free lunch went. The simple short-term solution solution is keep being successful, and make sure the market has an ever-increasingly loving view of your stock. Dell's done a good job so far. But to me it smells of portfolio insurance, the Nifty Fifty and all other things too good to be true. Good Investing, Mike

To: Walt Corey who wrote (43895)	5/20/1998 3:11:00 PM
From: Paul Merriwether	Read Replies (2) \| Respond to of 176387

<< Thats generally wrong. Options are a great way to FORWARD reward employees for good performance IF they hang around for the options to vest. This is generally a 3 to 5 year time frame AND the employee HAS to be continually employed for that period of time. My experience is that now a days it's tough to have employees stay 5 years so options are a very very inexpensive form of virtual compensation. >> While options usually vest over a 5 year period, the employees can cash out 20% a year. It is true that most don't(because of greed!) some(like myself) do so every year. Also, with options, most employees DO stay, as long as the stock keep performing well. In other words, imho, options are meant to hold on to prized employees (the "golden handcuff"), and not a way to cheat them with "inexpensive virtual compensation". No Dell employee in his right mind would leave a few hundred thou. of vested options on the table and jump board! I would be surprised if some Dell employees don't cash out and diversify at these nose bleed levels!