[Am-info] "Fool me once ..."

[John J. Urbaniak]

Sujal Shah wrote:

> This seems like a decent plan, to be honest... they're helping current
> employees with underwater options gain some money for those options.
> The restricted shares are commonly given to executives... are you
> arguing that executives are getting shafted in many companies across the
> U.S.?

No.  Gates and Ballmer are not getting shafted.

>
>
> Seriously, the restrictions are pretty basic.  Also, they're expensing
> them on their earnings, thereby making their earnings more transparent.
> This is a good move all around from what I've read.

Then you've read Microsoft spin.

Issuing new stock will dilute all the stock that exists.

This has three long-term effects:

(1) it reduces the value of the stock because there are more shares
outstanding,
(2) it lowers the earnings-per-share value because there are more shares,
(3) it lowers the earnings per share because the expenses increase to cover
the stock paid to employees.

These things have a long-term negative effect on the stock.  So while the
employees get their "restricted" stock at today's value, in the future the
value will be reduced.  Unless Microsoft shows significant growth.

There has been nothing in the past three or so years to indicate that
Microsoft will show any significant growth.  Every part of Microsoft's
business *loses* money with the exception of Windows and Office.  None of
their other adventures have worked out.  They have all been losers.  So
where's the significant growth to come from?

>
>
> Am I missing something here?

You're missing the old wisdom: "Fool me once, shame on you ..."

>
>
> I'm sure their employees are getting paid just fine

Oh?  This whole thing was a result of employee complaints.  Somehow, they have
to make the payments on their Ferarris and Porsches.  Real estate in Seattle
is ridiculous.  Schools there are expensive ...

> ... stock options in
> a company like Microsoft are generally not about base compensation, but
> about growth.  They are incentives to perform well... I don't think
> people plan on having the options worth something when they do their
> budgeting.

Really?  Tell that to the guy with the $750,000 mortgage.  Tell him after
working his 80-hour week that he's not performing well.

They didn't look at those monthly statements and see all those dollar signs
which have now evaporated?  They didn't think to themselves "Wow, I've got
lots of money here?  I'm a Microsoft employee and I'm rich?"

Poof.  It's all gone.  And now we give you "restricted" stock?


> I haven't, and my options at my current company are worth
> money and almost always have been since I started working here.

Yeah, but not Microsoft options.  They're worthless.  MS employees slaved 10,
12, 14, 16-hour days for years and ended up with nothing.

Are Gates' and Ballmer's stock "Restricted?"  No, they are not!  Gates and
Ballmer can sell their stock any time they want and get real money.  It's been
reported that Ballmer sold something like 70 million shares recently.  Gates
has sold his stock over the years to go from about 50% of the company to less
than 20%.  Gates and Ballmer ain't dumb.  They knew when to cash in.  No
restrictions there.

Gates and Ballmer took very good care of themselves.  Their employees?  Well,
maybe they just don't matter.  They won't mind a few "restrictions" on their
compensation.

John




>
>
> Sujal
>
> On Wed, 2003-07-09 at 12:22, John J. Urbaniak wrote:
> > Once again Microsoft is scamming its employees.
> >
> > For years, Gates paid Microsoft employees with Stock Options, which have
> > turned out to be worthless.  They worked and slaved for him and Ballmer
> > and ended up with nothing.  (But of course, Bill and Steve dumped lots
> > of their stock and cashed in over the years.)
> >
> > Now he's trying to pay them with "Restricted" Stock.
> >
> > Restricted?
> >
> > If I were a Microsoft employee, with expensive mortgage, car, school,
> > ... bills to pay, I'd tell Bill Gates where to shove his *restricted*
> > stock.
> >
> > I'd say "Pay me with REAL MONEY!  Money I can use to pay my bills.  You
> > got your money, Bill and Steve.  I want mine.  NOW!"
> >
> > As they say, "Fool me once, shame on you.  Fool me twice, shame on me."
> > I just wonder how stupid those Microsoft employees can be.   Will they
> > fall for this new scam on their livelihoods?
> >
> > Of course they will.
> >
> > John
> >
> >
> >
> >
> >
> >
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> --
> ---- Sujal Shah --- sujal@sujal.net ---
>
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