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To: Joe NYC who wrote (28401)	7/20/1998 12:52:00 AM
From: Paul Engel	Respond to of 33344

Joe - Re: "Replace Intel with company ABC, because I don't want this to turn this into another Intel vs. XYZ " Your argument, as noted, applies to all companies that offer stock options. Intel sells put warrants as a matter of course - to generate cash with which to spend (as in, buying stock for stock options). The put warrants also occasionally result in Intel being "put" the stock, but at a lower price (due to the put premium) than the put strike price. Agian, what would drive Intel's stock price to $102? Answer - higher profits! Those profits would then come in handy to buy back the shares. Paul

To: Joe NYC who wrote (28401)	7/20/1998 1:39:00 AM
From: FJB	Read Replies (1) \| Respond to of 33344

Joe, Your argument has great merit. I'm going to research this further. The "profits" reported by many companies are illusory due to what you are describing. I'm ordering this book for the purposes of gaining a greater understanding of this. amazon.com Bob

To: Joe NYC who wrote (28401)	7/20/1998 4:40:00 AM
From: Craig Freeman	Read Replies (1) \| Respond to of 33344

Jozef, option grants are a license to steal. In an effort to curtail excessive grants, the accounting rules were changed to require companies to calculate per share earnings as though all outstanding options had been exercised. But many companies just instituted "buy back" programs to hide the dilutive effects. For example, over time Intel might report $10B in total earnings, grant stock options worth $10B, and then buy back $10B in open market shares. The net effect is that Intel would have paid its employees every cent while reporting excellent earnings! The market tends to ignore options/buyback activity for a long time but eventually it is fully reflected in the stock price (typically when a company has a bad year and "suddenly" finds itself short of cash). To see how well a company is serving its shareholders, you often need to examine year-over-year changes in book value rather than just reported earnings. Craig