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Strategies & Market Trends : MDA - Market Direction Analysis

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Jan 5 4:00 PM EST

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To: bobby beara who wrote (58531)	8/29/2000 4:21:16 AM
From: Haim R. Branisteanu	of 99985

Finaly the press pays attention will see if J6P will start scratching his head <GGG> As long as the stock market rose, few investors seemed to care that corporate earnings were overstated. But now with the stock market mostly moving sideways, perhaps they will begin to notice what option programs really cost them in the way of lower earnings. ............. Naturally, the larger the option grants, the bigger the hit to a company's earnings. Ms. McConnell found four industry groups in the S.& P. 500 whose earnings would have declined 10 percent or more in each of the last three years if option grants were counted as an expense. Companies in the business of health care services would have shown a 38 percent decline in earnings last year; computer networking concerns, 24 percent; commercial and consumer services companies, 21 percent; and communications equipment makers, 19 percent. Earnings at 122 companies -- almost one-quarter of the stocks in the index -- declined more than 10 percent last year when stock options were accounted for as an expense. That compares with 79 companies showing such declines in 1998 and 61 companies in 1997, Ms. McConnell said. nytimes.com Haim

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