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

To: cfimx who wrote (51322)	3/11/1999 2:29:00 AM
From: Michael Bakunin	Read Replies (2) \| Respond to of 132070

Brevity is wit, as the bard almost said. Try this little epistle: #reply-7803924 Oh, my, yes. mb

To: cfimx who wrote (51322)	3/11/1999 7:52:00 AM
From: Earlie	Read Replies (2) \| Respond to of 132070

Twister: I suspect I have as good or better familiarity with the ins and outs of MSFT's public disclosures as do you or most others. I sure spend a bit of time at it. I point out that it was me, and not you who brought this matter to the attention of the thread. If you don't think that this is arcane, then I would suggest you compare MSFT's revenues, and profits with the dollars they bring in through this option situation. I thought "arcane" was an extremely polite way of putting it. Do a bit of math and figure out the dilution to shareholders that this process creates, both current and future. If that doesn't worry you then I can be of no help. As I put it in some previous written material, it is an efficient process by which the retained earnings of the company are transferred from the shareholders to the employees,....with very few shareholders being aware of the activity. When a company lowers its expense line artificially, it's bottom line benefits proportionally. In this case, MSFT pays its employees quite substantially via stock options, which do NOT show up on the expense line, hence the reported profits are bogus. MSFT then turns around and takes another benefit by sucking in the taxes paid by the employees to the government. No wonder the balance sheet looks good. Take a look at the number of BILLIONS of dollars already hauled in via this process. MSFT does report their option situation, but as you point out, its in the notes, which few people read and even fewer understand. The fact that I brought this matter to the thread's attention ought to suggest to you that perhaps I've actually read those reports in extreme detail, which is the case. I invite you to do as I have,.....read them thoroughly and then put yourself in the shoes of Mr. Average investor and try to understand the implications,.....its not easy to say the least. It is my opinion that the method used to report this activity IN NO WAY does a proper job of ensuring that the public really understands just how massive the dilution is or how much of MSFT's cash hoard derives from a nutty tax loop hole. Incidentally, I don't blame MSFT for exploiting the stupidity of the tax situation, I only care that the investing public understand what they are buying when they acquire MSFT stock. Check out the cash brought in by MSFT via the sale of put options against its own stock over the last couple of years. You will then understand my "hedge fund" comment. When you have completed this homework, why don't you post the sums of cash that have been brought to that "pristine" balance sheet by way of activities that are unrelated to Microsoft's supposed main business, which is operating systems and software. I doubt that you will be able to do it properly as it is a bit of a "dig" and requires both time and some forensic accounting skills. If you do manage it, the sums will take your breath away. This scheme has three inter-related parts; a stock buy-back plan, the sale of put options against the company's own stock, and the granting of stock to all employees down to the lawn cutters. Taken together, it is a rather clever way to pull in cash during a bull market. But there are unseen (by most) "costs", unseen dilution being a significant example. Best, Earlie

To: cfimx who wrote (51322)	3/11/1999 10:32:00 AM
From: Mike M2	Read Replies (1) \| Respond to of 132070

Twister, I don't see the use of MSFT as an example as an attack on MSFT specifically many companies give huge amounts of stock to their employees. I think the use of MSFT as an example is meant to bring attention to this issue since MSFT is seen as one of the most successful and profitable tech companies. if you would like to see other examples see Forbes 5/18 or 23 ? /98 article with Andrew Smithers. In my opinion this practice misleads investors with respect to the earnings power of companies. No one has suggested or implied that this is illegal -it is in compliance with GAAP . mike