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Technology Stocks : DELL Bear Thread -- Ignore unavailable to you. Want to Upgrade?

To: Bilow who wrote (916)	5/28/1998 10:44:00 PM
From: Richard Tsang	Read Replies (1) \| Respond to of 2578

Carl, thank you for taking the time to give us all this explanation. Unfortunately I could not retrieve the article from Forbes. However, I would also like to offer the following comments: 1. The outstanding options is 110 million shares and all should be accounted for in calculating the dilution effect, no matter they are freshly issued or issued long ago, as long as they have not been exercised or cancelled. 2. I agree that the buyback is a decision of "better use" of money to create value for company. However, I would think that if they did not issue any stock options, the need to buy back would not have been considered, therefore all the money will have stayed as retained earnings in the equity accounts which belongs to shareholder, instead of being deployed to. 3. The decision to issue stock options and how much to issue to what ranks, etc., rests with the management who are the main beneficiaries of such program. The decision to buy back shares to boost up the stock price is also theirs. I do not think that this is healthy practice. It may be an ethical issue, IMO. I have seen companies borrow money to buy back shares to reduce float and boost EPS, and profit from the rise in stock price as a result (Dell is not in this category as they have plenty of cash). 4. I was once told that the actual cost of the spread (difference between the option price and fair market value on date of exercise) on those that were exercised in the fiscal period can be made a tax deductible expense by way of footnote in the corporate tax return. If that is true, it means the tax authority does recognize such cost as "business expense". Have you seen any such "footnote" in public reports? I am new to this country and new to this area of accounting although I do have considerable accounting experience in other parts of the world. Best regards to you, RT