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Technology Stocks : PSFT - Fiscal 1998 - Discussion for the next year -- Ignore unavailable to you. Want to Upgrade?

To: RetiredNow who wrote (3671)	11/22/1998 2:32:00 AM
From: Chuzzlewit	Respond to of 4509

That's precisely one of the reasons options are so popular. They have no impact on EPS. But if you think about it, its really a shell game. Hide the true expense of doing business from the shareholders and maybe nobody will notice. Also, think about a point that you made in a previous post -- joining the shareholders and management in a commonality of interest. Okay, then why do companies reprice options? Answer: the reason is that it is not designed to ensure commonality of interest, but to fund employee and management salaries off the income statements. It is a subterfuge. TTFN, CTC

To: RetiredNow who wrote (3671)	11/22/1998 12:40:00 PM
From: Richard Tsang	Read Replies (1) \| Respond to of 4509

Mindmeld, Repricing will have some negative effect on EPS on diluted basis going forward. The way dilution is calculated for EPS reporting is to kick in the "in-the-money" options into the divisor. The formula calculates the aggregate intrinsic value of all outstanding options. You will notice the difference in diluted shares between periods. That means those options that were not dilutive will become dilutive after repricing when the market price goes higher than the new option price and will cause the diluted EPS to go down. I think management is aware of this problem which, in their mind, is very small as compared to the need for attracting and retaining talents. RT