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

To: jim kelley who wrote (80553)	11/15/1998 11:01:00 PM
From: Richard Tsang	Read Replies (2) \| Respond to of 176387

Jim, thanks for pointing to Barron's article. To my big surprise, they said that the employees (Dell included) made $1 billion profit by cashing in their stock options in the last quarter alone. That must be a lot of shares exercised and sold, then bought back by the company. The 18 million shares was mentioned somewhere, so that averaged about $55 profit a share for employees, wish I were one of this lucky bunch! Employees are responsible for their individual income tax on this profit, as part of their compensation although it is not charged against company profit. As explained earlier, since the employees paid tax on this income, the company can claim tax deductibility on proforma basis. IRS is obligated to allow that so that the money is taxed only once, i.e., the employee. At income tax rate of 30% for the company, that means a tax benefit $300 million. I am not sure why this would be included in "other assets". It could be categorized as "other receivables" from IRS, which will be used to offset income tax payable to IRS in the next quarter. I would assume that this has been reflected in the stock holder's equity account to partly offset the huge impact of equity dilution. Yes, it is huge dilution of shareholder's equity. I can't imagine that with all the billions of dollars made by the company, they only have 1.9 billion in the equity account at end of Q3. Well, I think the employees are smart people. Why did they take 1 billion dollar profit from selling Dell stocks in Q3 alone, while Dell only made a little over a billion in the last 3 quarters? Am I missing something? The Barron's article is neutral about Dell, IMO. It praised the miracle of tripling the stock price in 1997 and repeated that this year. It also pointed out the vulnerability of the stock price going forward. RT