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Technology Stocks : WDC/Sandisk Corporation -- Ignore unavailable to you. Want to Upgrade?

To: Bill Zeman who wrote (5346)	4/10/1999 8:09:00 PM
From: Craig Freeman	Read Replies (2) \| Respond to of 60323

Bill, the options plan is probably driving the price down. In August of 1998, SNDK reset almost a million options from an average exercise price of >$22 to just $10. That equated to a gift to SNDK management of ~$12M ... an amount greater than the entire year's profits. Now they want to give away >$1M in options each year which are exercisable at 85% of market. At $20 a share, that's worth around $3M -- which isn't out-of-line. But if they persist in reseting the options to a lower value, SNDK could easily disburse all of the company's profits in the form of options from now until eternity. A company can get away with this kind of activity when profits are roaring. But when things are just OK, the market reads this kind of giveaway as self-dealing on the part of management and discounts reported profits by the hidden costs of the options. Craig