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

To: gbh who wrote (51819)	3/14/1999 11:47:00 AM
From: Earlie	Respond to of 132070

Gary: The "call" approach is an accounting gimmick to me. The fact is that the options are out there and when exercised, a big bunch of new stock gets issued. That's plain and simple dilution. Note as well that we are not talking small numbers. Additionally, the expense line is artificially reduced, which inflates the bottom line. This attracts buyers to the stock. One could argue that the tax payers also get cheated by this situation, but that's not my territory. (g) I made the point that the whole thing might become more understandable if you visualized all companies doing it to the extent that MSFT does it. We'd have problems, for sure. MSFT is not the company many think it is. Much of its cash is derived from stock market activities. I still don't see it (yet) as either a long or a short. Incidentally, I'd bet that you were not aware of this situation until I brought it up on this thread,....and you're a cut above the average investor. Best, Earlie

To: gbh who wrote (51819)	3/14/1999 4:04:00 PM
From: Michael Bakunin	Respond to of 132070

If the tax loophole is closed, it's business as usual at MSFT -- but their cash flow goes down due to higher taxes. If MSFT really wants the cash, they can expense the options under SFAS 123, which they just might do -- but then everybody would see the expense in EPS. I had a quick little exchange on the subject recently on this thread, as well as making a post in about February. See #reply-8274485 for my recent reply on just one of the many problems even within MSFT's footnote disclosures, or #reply-7803924 for the big picture. My favorite quote from their last 10-K: "The market value of all outstanding stock options was $48 billion as of June 30, 1998." How high will that number be this June? MSFT is a bad put candidate while they're a monopoly -- but the second I think their monopoly is broken, they're at the top of my list. mb