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

To: Earlie who wrote (44534)	1/25/1999 3:58:00 PM
From: RealMuLan	Read Replies (1) \| Respond to of 132070

<<Is the market for sub-$1,000 mobile PCs around the corner?>> biz.yahoo.com

To: Earlie who wrote (44534)	1/25/1999 4:06:00 PM
From: Don Lloyd	Read Replies (1) \| Respond to of 132070

Earlie (...Who loses? Shareholders, through dilution,...a double dose of dilution,...once through the employee options and again through the share buy-backs....) Isn't the problem with buy-backs not dilution, but rather just the gobbling up of most or all of reported earnings, denying them to the shareholders over time? Regards, Don

To: Earlie who wrote (44534)	1/25/1999 6:39:00 PM
From: Mike M2	Read Replies (1) \| Respond to of 132070

Earlie, thanks for the detailed reply mine are too brief. Gary Shilling has a new book out " Deflation" I am most impressed so far. I know that the concept of deflation is nothing new to you but I highly recommend it even for the more informed reader as an excellent reference source -you'll love the historical charts and graphs. He has made some excellent big picture calls and dispels the myth that people from New Jersey don't understand economics -g- hohoho Mike

To: Earlie who wrote (44534)	1/26/1999 9:58:00 AM
From: Ilaine	Read Replies (2) \| Respond to of 132070

Hi Earlie, I have a few questions about your explanation about the stock options, please bear with me. First, all employee compensation is an expense to the company, whether it is salary or stock, so your suggestion that there is something unsavory about taking a tax deduction when the option is exercised puzzles me. The only other way to do it that I see would be to recognize the tax consequences the time the employee receives the stock, rather than at the time the employee exercises the option. Is that what bothers you, and if so, why? If it is a gain to the employee, then it is deductible by the company, whenever the employee receives it, so it will always reduce corporate earnings, as well as reduce corporate taxes, whenever the tax consequences of the transaction are recognized. Second, the corporation can't issue stock without having authorized it in advance, so don't shareholders know in advance how many shares are outstanding, and are earmarked for employees? Third, particularly in a start-up company, it is common practice to compensate employees with stock rather than salary, partly because the company may not have cash at the time, partly because stock is usually tied to incentives to stay with the company, with mandatory requirements that the employee relinquish the stock or sell the stock unless certain requirements are met. Your suggestion that the stock options are given at no cost to the company is puzzling. I think you mean that it doesn't cost the company any cash, but obviously the shares have value, and giving them to the employees has a cost. After all, the other employees are shareholders, as well, so it is a real transaction, one of substance, to give a co-worker a slice of your pie.