SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Technology Stocks : Amazon.com, Inc. (AMZN)
AMZN 229.55+0.2%Dec 5 9:30 AM EST
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: GST who wrote (145249)8/13/2002 10:32:11 AM
From: Wizard  Read Replies (3) of 164684
 
>>You can choose to ignore the impact on the bottom line but the market will not do so. Metlife announced today that they will expense options -- the list grows every day.

Well, I think the market is doing so. Stocks that expense options aren't going up. Companies that choose not to expense aren't going down. I think you fail to understand something critical here. Valuation is not based on 'reported earnings per share'.

If you owned an apartment building and you had to pay the maintenance guy and others that worked for you 3% of the equity in the building every 3 years (instead of cash), does it really matter if accounting says that you have to 'report' a $500k per year hit to your 'earnings'? Does the fact that you have to report it that way make the building less valuable? No. The 'cost' is the dilution you get over the long-run. If you calculate the tenants rent and divide by the diluted share count, that is an accurate measure. The 'cost' is the dilution. Your cash balance in your business account is what you care about, isn't it? Who cares if a piece of paper says you have losses IF your cash balance is going up by X dollars a year.

I am not saying there isn't a cost associated with options. However, the cost is the dilution. There is no economic cost to the company that is in excess of the dilution.
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News