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Technology Stocks : Cisco Systems, Inc. (CSCO)
CSCO 83.64+0.6%9:59 AM EST
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To: RetiredNow who wrote (67934)5/20/2005 8:11:49 AM
From: rkral  Read Replies (1) of 77400
 
mindmeld, re "But I'd argue that this is true, but since 2001, the cash Cisco is generating is 95%+ coming from operations, not from options exercises. "

A very significant reason for that is you, like Cisco and many other companies, are counting "stock option income tax benefits" as part of cash flow from operations (CFFO).

But I'd argue that it is quite disingenuous to count the tax benefit as part of CFFO on the cash flow statement ... and then to count it as part of common stock and paid-in capital (CS&APIC) on the stockholders' equity statement.

CS&APIC implies that the cash is from a *financing* activity ... *not* an operations activity. With that POV, the cash Cisco is generating is more like 75+% from operations. And that's *before* expensing options on the income statement.

Ron
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