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Technology Stocks : Semi Equipment Analysis

SOXX 309.40

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Dec 5 4:00 PM EST

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To: The Ox who wrote (4153)	7/19/2002 10:12:34 AM
From: Crossy	of 95530

Michael, accounting treatments are usually laughed at among the profession of corporate finance. This strain of managerial accounting (which I tend to prefer over GAAP accounting at ANY TIME) usually prefers ratios and analyses related to cash-flow measures instead of artificially crafted "Goodwill" or Capizalizaion of expense items. And I think TJ is right. Actually the issue is 2-fold. First it's how options that are issued are treated on the balance sheet. Right now it's not fully an expense nor is it a "capitalized" asset. It's something in between. I would not expense them but rather would like to equate a charge as to the dilution introduced on current shareholders. That would make sense. The other area of interest here is the TAX TREATMENT. Many years ago when the left wing of the Democrat Party contolled congress (under the sentiment of class warfare), a cap was introduced on tax deductability of CASH PAYMENTS (not options !) for salaries at $1million per year. This is an explanation why Option an bonus items (profit sharing) now make up more than 75% of top management pay. Then under Reagan and Bush, firms were encouraged to use options even more because they were offered tax rebates on options executed. Clinton who viewed this quite pragmatically then was embraced by the high tech community to even expand this. I think all former presidents were right in their advocating this tax rebate treatment. And that's exactly how to look at it: in the US senate it's the tax & spend people that would like to end this tax rebate: The Daschles among the Dems and the McCain's among the GOP. Better not listen to those populists and if Bush reaches a bill containing such nonsense (if the House didn't have the guts to stop such a move) I strongly hope he starts leading again by using his VETO pen (a tactic he rarely used so far). So I think it's important to seperate the two issues. They are not related to the same subject essentially. best rgrds CROSSY

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