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To: Mike Buckley who wrote (54309)	8/26/2003 7:18:37 PM
From: hueyone	Read Replies (1) of 54800

Here is the article: Dell's Hollow Share Buybacks fool.com Snip: Dell's problems are twofold. The first is that the company's employee stock option grants and option purchase plans have been so generous that most of the value created by its business gets redistributed from shareholders to employees. The second problem has been its policy of repurchasing shares at high prices to combat share dilution. Dell is repurchasing shares at all kinds of prices to offset share dilution from employee stock option exercise. Really, issuing lots of employee stock options and then repurchasing the shares with company money is a sly way of hiding the expense of employee stock options from shareholders, keeping this expense off the books while keeping reported per share earnings up. Yet much of Dell's vaunted reported "free" cash flow has disappeared in to these buybacks even as overall share count has actually increased. In sum, the company has never retained the supposed wealth that investors thought it was generating. The game did wonders for the stock price though. Here is another article making similar points that does not require a fool membership: The High Cost of Dell's Stock Option Program thestreet.com JMO, Huey