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To: Snowshoe who wrote (3443)	7/21/1998 4:11:00 PM
From: Allen Benn	Read Replies (1) \| Respond to of 10309

More to the point, what is your view on the situation at Microsoft and its tremendous overhang of employee stock options per my previous post? I think the article is stupid - and no one can accuse me of being a White Knight for Microsoft. In a nutshell, the authors are concerned because Microsoft has outstanding options worth $23 billion, while the company has only made profits of $8 billion over the last 10 years. This makes it seem that if employee compensation were accounted for, then MSFT would be seen to be losing money hand over fist. Absolute nonsense. Look at the situation as of Microsoft's last fiscal year, ending June 30, 1997. At that time MSFT has 1204 million shares outstanding, with an additional 239 million in options. If all the options were exercised on the next day, there would still be only 1443 million shares outstanding. That means MSFT's EPS for 1997 is over-stated by at most 16%. Bad but not the end of the world. Meanwhile, are things getting worse for Microsoft? The balance of employee options over the last few years was 228 million, 228 million, 238 million and 239 million for FY years 1994, 1995, 1996 and 1997, respectively. Doesn't seem like things are going downhill to me. Sure, there were buybacks during each of these years, but they were offset significantly by purchase costs and selling puts. Too bad you don't appreciate the intricate differences between KO buybacks and high tech companies, and whether Buffett likes the buybacks or not. You will pleased that Pirah and I agree we should try henceforth to keep KO out or our posts -- unless we just can't. Allen