Some more info on INTC stock options...
The typical option grants at Intel can not be exercized for five years and must be exercized in ten years... Thus, this year people can start exercizing options from 2000, and some will have to exercize options from 1995.
Options are granted at about fair market value around May of the year of the grants. If we look at INTC stock price over the past five years, it is pretty flat and varies from about $19 to $30, which would be the range for the grant price on these 600M option shares. .. say average around $25/share. The effect of exericize of these options is a gain in book value for INTC since they will get the $25/share *600M shares = $15B gain in book value (less dilution due to more shares out there, but with book value at $6/share it is clearly a gain). INTC of course could turn around and use that cash to buy back shares at market of $37 (your hypothetical number) and aquire about 400M of those shares back... resulting in a real dilution of only 200M shares or about 3% total dilution for the past five years of options... assuming a $37 stock price. Of course, the real issue now is options granted from 1995 to 2000, and some of those are for much less money than the $25 I estimated for the more recent period. I suspect all the y2000 options have been canceled at this point as worthless:-)
--Alan
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