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

To: Chuzzlewit who wrote (63975)	9/7/1998 1:04:00 PM
From: jim kelley	Read Replies (1) \| Respond to of 176387

CTC, Whether the buyer of the DELL puts exercises their option to sell or not, DELL receives the intrinsic $ value of the put along with the time value and volatility premium at the time the the put is sold. So basically DELL already has its money in hand. If the put is exercised by the buyer then DELL gets to reduce its stock float. The shares that it accumulates this way become treasury shares that can be used to award employee options. This tactic reduces the cost of funding the employee stock option plan and also the buyback of the DELL stock in general as long as the stock is in an upwards trend. DELL has been in a strong upwards trend for a number of years now so this tactic has been very effective. This tactic has probably reduced their cost of repurchasing stock by about 30% of the strike price of the option and to about 26% of what it would cost them to purchase on the open market at the time the buyback plan is approved. These are of course approximations based on the use of Leap Puts. Baron's would like DELL to not pay employee stock options and to build up a huge cash hoard, I suppose. But DELL is growing its business very rapidly and needs to be able to attract quality employees in a tight labor market. Jim Kelley