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Strategies & Market Trends : MDA - Market Direction Analysis

SPY 689.58

-0.3%

Jan 7 4:00 PM EST

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To: Haim R. Branisteanu who wrote (40223)	2/13/2000 7:59:00 PM
From: Benkea	of 99985

haim: "Adding the option pay to wage cost will increase employee compensation by at least 10% which will actually wipe out any real pretax profits. So most High Tech Companies such as CSCO or MSFT or many others do not earn any pretax income as all income is first distributed to their own employees and mostly to management." To further illustrate your point: CSCO's stock appreciated $31 per share in the quarter just reported. This increased the value of outstanding options in excess of $8 bil in the quarter. So compensation expense (which is what it is - what else is it?) was 2X REVENUES and 10X net income in the quarter. Boy, that is some kinda profitable company (for employees maybe). Incidentally, the same can be said for MSFT, YHOO, as well as most of the other pyramids.

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