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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Exacctnt who wrote (42626)	1/8/1999 2:55:00 AM
From: yard_man	Read Replies (1) \| Respond to of 132070

Robert == thanks >>The column also implied that Microsoft's financial condition and liquidity might be strained if the put warrants were exercised. This is equally mistaken. Our put warrants have a ''net share settle'' option that allows the company to settle any obligation by issuing new shares, rather than paying out cash. Microsoft uses equity put warrants to reduce the cost of our stock-option and share-repurchase program. We publicly provide complete information about all of these programs and have received kudos for our disclosure. In the four years that we have sold equity put warrants, we have generated $1.1 billion of after-tax proceeds and have never had a put exercised against us. We think the program has been an enormous success. Investors and the press, of course, can make their own judgment -- it's just better to do so with the facts. << I think in a way this is even more underhanded than goosing income. They simply intend to issue new shares if the market runs against them. The thinking must be they will not have any put warrants outstanding when there is a stumble, but what if they have a bunch outstanding when a real BK hits -- they issue a bunch of shares to covertheir warrants while the price is plummetting? OK, so it increases equity not income, so what? It is cash money, right? The CFO makes it sound like they are getting something for nothing, when in fact shareholders are being forced to participate in an options transaction that can result in a dilution of their equity at the worst possible time. I think it is a raw deal for shareholders. The whole thing is a larger part of legally lying (option grants being a larger part of the income for the troops) about the true costs of labor, IMO.

To: Exacctnt who wrote (42626)	1/8/1999 11:40:00 AM
From: Knighty Tin	Respond to of 132070

Bob, I saw that. I have sent away for the MSFT 10K to see all the details. Two quick notes. First, they are put warrants and not puts, so it is a scam based upon warrants as capital, not upon listed put options or synthetic stock. And, second, the CFO was certainly disingenuous saying that the proceeds add nothing to eps. He is really saying they don't even earn interest on the cash when he tells that lie. <G> But I want to get all the details and see if MSFT and Dell are running the same game of 3 card monty. MB