I don't think ANY new stock is created when an employee exercises an option (at least for my recent company it wasn't). There are X total shares outstanding, and there are Y shares set aside for currently granted and future granted stock options. This way, when an employee exercises stock, there's no need to create these new shares -- they've already existed, all along, legally. Let's say that Z shares have been, to date, exercised (a few by joes like me, most by big execs). So there are currently (X - Y + Z) shares out in the market place, and (Y - Z) shares left to be exercised. When computing undiluted earnings, I guess companies use PROFIT / (X - Y + Z). Because companies like MSFT have so many unexercised options, they might prefer this measure to the fully diluted earnings, which is PROFIT / X, which would be significantly smaller. If one or more employees exercise many shares, then Z increases, and undiluted earnings go down. However, MSFT DOES NOT NEED TO GO OUT ON THE OPEN MARKET TO BUY THE SHARES AT $100 TO GIVE THEM TO A PARTICULAR EMPLOYEE FOR $30 (and this is where the Parish dude messes up his facts -- MSFT doesn't have a pyramid scheme going, at least not in this respect). In fact, MSFT gets to keep the $30 for themselves when they formally transfer ownership of the pre-existing stock from themselves to the employee. The employee typically sells the shares the same day in a post-IPO situation. However, in pre-IPO situations employees often exercise stock options (even before they are fully vested in them) for the tax benefits.
On a laptop, use Microsoft MSDE (Microsoft Data Engine). I think this is a nearly full-featured SQL Server 7.0 engine without the scalability. The APIs used for MSDE are the same as for SQL Server 7.0. The product is free, too (download at MSDN site). I guess the intent is to have developers use MSDE for prototyping and small deployments. Customers will upgrade to full SQL Server once their application demands it. Perhaps MSDE will be part of the standard NT distribution soon.
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I don't think ANY new stock is created when an employee exercises an option (at least for my recent company it wasn't). There are X total shares outstanding, and there are Y shares set aside for currently granted and future granted stock options. This way, when an employee exercises stock, there's no need to create these new shares -- they've already existed, all along, legally. Let's say that Z shares have been, to date, exercised (a few by joes like me, most by big execs). So there are currently (X - Y + Z) shares out in the market place, and (Y - Z) shares left to be exercised. When computing undiluted earnings, I guess companies use PROFIT / (X - Y + Z). Because companies like MSFT have so many unexercised options, they might prefer this measure to the fully diluted earnings, which is PROFIT / X, which would be significantly smaller. If one or more employees exercise many shares, then Z increases, and undiluted earnings go down. However, MSFT DOES NOT NEED TO GO OUT ON THE OPEN MARKET TO BUY THE SHARES AT $100 TO GIVE THEM TO A PARTICULAR EMPLOYEE FOR $30 (and this is where the Parish dude messes up his facts -- MSFT doesn't have a pyramid scheme going, at least not in this respect). In fact, MSFT gets to keep the $30 for themselves when they formally transfer ownership of the pre-existing stock from themselves to the employee. The employee typically sells the shares the same day in a post-IPO situation. However, in pre-IPO situations employees often exercise stock options (even before they are fully vested in them) for the tax benefits.
On a laptop, use Microsoft MSDE (Microsoft Data Engine). I think this is a nearly full-featured SQL Server 7.0 engine without the scalability. The APIs used for MSDE are the same as for SQL Server 7.0. The product is free, too (download at MSDN site). I guess the intent is to have developers use MSDE for prototyping and small deployments. Customers will upgrade to full SQL Server once their application demands it. Perhaps MSDE will be part of the standard NT distribution soon.