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Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: BGR who wrote (114158)	4/4/1999 1:23:00 PM
From: Chuzzlewit	Read Replies (2) \| Respond to of 176387

I think your premise is incorrect. You said But if the cost is shouldered by the Ask Burke Thread, for example, as well as other LEAPS put buyers, why should the long investors care? The employee stock options represent shares that have not yet been issued. LEAPs are based on stock that already exists. So I think you are confusing the method of funding with the problem. In any event, selling puts as a means of funding employee stock options may have worked well with Dell, but it is a dangerous practice. Suppose that the market took a major hit and Dell dropped to $20, and Dell was short puts at $35. It would take a cash loss which would never appear on the income statement. But that's not the end of the problem. Dell would need to reprice the options to a point below market (remember, these packages have really become entitlements).This is a nightmare that periodically comes true for companies. If they do not reprice they lose their employees. And if they do they have assumed a tremendous market risk. The entire structure depends on fooling shareholders. Besides which, Bennie posted an article earlier that indicated huge employee turnover with stock options, so their use clearly does not guarantee loyalty. I believe that there are only two legitimate purpose for issuing stock: 1. to fund the capital needs of the business; and 2. provide sufficient "currency" for mergers. TTFN, CTC