[Am-info] Stock options and MSFT earnings

[John J. Urbaniak]

"John J. Urbaniak" wrote:

> http://www.business2.com/articles/web/0,1653,37549,FF.html
>
> " ... You can figure this stuff out for yourself by looking for the
> Black-Scholes  calculations buried deep in company 10-K filings. Looking
> at Microsoft's most recent 10-K, for example, we see that the company's
> reported earnings of
> $1.32 a share for fiscal 2001 would have fallen to 91 cents a share
> after deducting the cost of options. "
>
> ================
>
> Let's see, $1.32 - .91 = .41
>
> .41 / .91 (the true value) = A 45 PERCENT DISCREPANCY in Microsoft's
> reported earnings versus actual earnings.
>

Expanding this, .41 per share * 6 billion shares (my guess at the number of
shares outstanding - it may be more) =

            $2.46 BILLION discrepancy in published earnings versus actual
earnings in just one year.

Worldcom's total discrepancy was, I think, $4 billion over several years.
Enron's was under a billion, I believe.

GE recently announced that they would expense options.  Their total effect
was LESS THAN 1 cent per share.


John