Intel Corp (INTC)

[SemiconEng]

Does anyone have an opinion about what will happen to the stock price once options have to be expensed? I asked my husband what he thought and he thought it was already factored in to the the price right now, I wasn't so sure, anyone have any thoughts?


I think it's going to initially depress the stock. After a relatively short period of time when the analyists adjust their models, some sort of eqilibrium will be established. I'm more concerned about what "method" is going to be used. Will different companies adopt different metrics? Will a "standard" be established? And even if it is....... Aren't there also problems with the model of the "leading contender"?


http://www.valuationresearch.com/4_news/2002_12.htm
In summary, the Black-Scholes model works fine for publicly traded options, but fails to accurately value employee stock options. In our experience, the Black-Scholes model, not adjusted for appropriate discounts, overstates options values by more than 50%. Black-Scholes is an appropriate starting point for valuation of options, but we recommend applying discounts for lack of marketability and restrictions. For more information regarding valuing stock options, contact your Valuation Research representative or Alfred King at [phone]. VR