Earnings per share:


Notes to Financial Statements

NOTE 2    EARNINGS PER SHARE

Basic earnings per share is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. Dilutive potential common shares include outstanding stock options, stock awards, and shared performance stock awards. The components of basic and diluted earnings per share are as follows:

 

(In millions, except earnings per share)             


Three Months Ended September 30,    2010     2009  

Net income available for common shareholders (A)

   $   5,410      $   3,574   

Weighted average shares of common stock (B)

     8,614        8,914   

Dilutive effect of stock-based awards

     81       69  


 


Common stock and common stock equivalents (C)

     8,695       8,983  
    


 


Earnings Per Share

                

Basic (A/B)

   $ 0.63     $ 0.40  

Diluted (A/C)

   $ 0.62     $ 0.40  


We excluded 104 million shares and 224 million shares underlying stock-based awards from the calculations of diluted earnings per share for the three months ended September 30, 2010 and 2009, respectively, because their inclusion would have been anti-dilutive.

In June 2010, we issued $1.25 billion of zero-coupon debt securities that are convertible into shares of our common stock if certain conditions are met. Shares of common stock into which the debt could convert were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive. See also Note 10 – Debt.