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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Gottfried who wrote (30513)	5/22/1999 11:40:00 AM
From: Ian@SI	Read Replies (3) \| Respond to of 70976

G., This was also discussed at length on the Dell thread shortly after the Forbes article and the Mike Burke thread BS. The definitive answer can be found there ( I believe in Chuzzlewitt's posts, perhaps John Rosser's). In short Dell has a share buyback program in place that essentially covers off the options issued. To reduce the cost of shares bought back, it both sells Puts and buys calls. Given the rate at which the share price has rocketed, this has been an extraordinarily successful strategy. The Forbes article erred in implying that the options proceeds made it to the earnings statement. This is not true. Those premiums are completely unrelated to Operating earnings or costs. However, the results can be seen in the balance sheet; I don't know whether the $3.1B is accurate or not, but it very well might be; and IMO, is a solid indication of a confident management that has very successfully transferred a bit of wealth from the big bad institutions to its corporate coffers. Ian.