Subject: [NEXTEL-1] The Cold, Hard Numbers on Stock Options.html

From: Marcel <[email-masked]>
Date: Wed, 29 Jan 2003 14:10:32 -0500

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Opinion : The Turnaround Artist - TSC

The Cold, Hard Numbers on Stock Options

By Arne Alsin
Special to RealMoney.com

01/29/2003 07:24 AM EST

Click here for more stories by Arne Alsin

Call it a bubble within a bubble. The extraordinary enrichment of company management, at shareholders' expense, is a bubble within the bubble of the 1990s' stock market. The market's bubble has already burst, led by the Nasdaq, and the options bubble may soon follow suit.
What will precipitate the collapse of the options bubble? First and foremost, it's a matter of getting the facts out. "Facts are stubborn things," as John Adams once said. I've called options a "scourge" and a "dirty little secret" in prior RealMoney columns. But this story doesn't really require inflammatory language. Everything we need to know is in the facts -- the cold, hard numbers.

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I've reviewed the 10-Ks for the top 15 companies in the Nasdaq 100. Three of the top 15 are not included in my analysis below: Comcast
(CMCSA:Nasdaq - news - commentary - research - analysis) and Nextel
(NXTL:Nasdaq - news - commentary - research - analysis), which have valuation allowances against options because they didn't have income, and Ericsson
(ERICY:Nasdaq ADR - news - commentary - research - analysis), which is a foreign company. The market value of the 12 remaining companies that I've reviewed represent 62% of the Nasdaq 100, a market-weighted index.
I've taken the last five years of reported income and subtracted the cost of options to reveal the "true income" of each company.
To take a look at Arne's calculations and find out more about just how costly options can be, please click here for a free 30-day trial to RealMoney. Once you sign up, you can read the rest of his column here -- and access all of our premium content.

Arne Alsin is the founder and principal of Alsin Capital Management, an Oregon-based investment advisor specializing in turnaround situations. At time of publication, neither Alsin nor ACM held a position in any securities mentioned in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Alsin appreciates your feedback and invites you to send it to [email-masked].

Click here to receive Arne's latest favorite stock picks from his newsletter, The Turnaround Report.

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