Notes of interest from the FY05 Q3 Apple conference call

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  • Reply 61 of 63
    brendonbrendon Posts: 642member
    Quote:

    Originally posted by sunilraman

    edit: deleted my ramblings, thanks Brendon



    Sorry I missed your ramblings, I'm a fan of ramblings. Some ramblings can be very enlightening, they are a form of free thought. 95% worthless, but 5% real gems, the problem is having the fortitude to pay attention to all in order to sift out the gems. Sorry for the bad spelling in my first post.
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  • Reply 62 of 63
    ouraganouragan Posts: 437member
    Quote:

    Does a company of Apple's size usually have 7.5 billions in cash?



    In technology companies, stock options are often preferred to salary as a way to compensate directors, managers and key employees. There is no immediate cash payment for companies which, as a result, tend to be more generous. Recipients benefit from the future growth of companies and, for tax purposes, stock options are considered as an immediate expense for companies serving to reduce their income tax. The cost of stock options is equal to their market value at the time they are issued, not the time they are converted to stocks.



    Stock options are often equal to 25% of the number of issued, publicly traded stocks. As stock options are converted to stocks, they are either bought back by companies at market value or a pre-determined value, or added to the number of issued, publicly traded stocks. Most companies create a cash reserve to cover the cost of buying back stock options, for otherwise they would reduce the value of existing stocks by increasing the number of stocks entitled to receive dividends and share profits.



    For accounting purposes, and stock exchange requirements, stock options used to be considered as deferred, future compensation to be declared if and when stock options are converted to stocks. Stock options would have a negative impact on company results only when converted to stocks.



    Steve Jobs was the highest paid CEO in America through his stock options. Steve Jobs and the Apple Board of directors opposed at first the new rules of accounting that will require stock options to be declared as expenses in the financial quarter they are granted, thereby reducing to zero the quarterly profits of many companies listed on the NASDQ stock exchange.



    What are the profits of Apple, once stock options are listed as expenses? What part of the cash reserve is available to finance expansion and distribute among stockholders?







    Pierre
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  • Reply 63 of 63
    melgrossmelgross Posts: 33,712member
    Quote:

    Originally posted by ouragan

    In technology companies, stock options are often preferred to salary as a way to compensate directors, managers and key employees. There is no immediate cash payment for companies which, as a result, tend to be more generous. Recipients benefit from the future growth of companies and, for tax purposes, stock options are considered as an immediate expense for companies serving to reduce their income tax. The cost of stock options is equal to their market value at the time they are issued, not the time they are converted to stocks.



    Stock options are often equal to 25% of the number of issued, publicly traded stocks. As stock options are converted to stocks, they are either bought back by companies at market value or a pre-determined value, or added to the number of issued, publicly traded stocks. Most companies create a cash reserve to cover the cost of buying back stock options, for otherwise they would reduce the value of existing stocks by increasing the number of stocks entitled to receive dividends and share profits.



    For accounting purposes, and stock exchange requirements, stock options used to be considered as deferred, future compensation to be declared if and when stock options are converted to stocks. Stock options would have a negative impact on company results only when converted to stocks.



    Steve Jobs was the highest paid CEO in America through his stock options. Steve Jobs and the Apple Board of directors opposed at first the new rules of accounting that will require stock options to be declared as expenses in the financial quarter they are granted, thereby reducing to zero the quarterly profits of many companies listed on the NASDQ stock exchange.



    What are the profits of Apple, once stock options are listed as expenses? What part of the cash reserve is available to finance expansion and distribute among stockholders?







    Pierre




    Stock options as used by tech companies is pretty much over. With the extremely fast stock price increases seen in the late '90's over, stock options being used in liu of proper saleries is a thing of the past. Even MS no longer uses them as a lure, with their stock price down.



    Apple already expenses these .
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