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Technology Stocks : Cisco Systems, Inc. (CSCO)
CSCO 74.40-1.4%Jan 14 3:59 PM EST
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To: GVTucker who wrote (41301)10/23/2000 12:16:13 PM
From: bambs  Read Replies (1) of 77400
 
Agreed. With almost a billion options out there that puts a collar on the stock price. I think that's the worry here. I think that when the article was written the stock was around $70. Bill P. said that the current option liability was around 40 Billion.

This year they only had operating income of 3.2 billion
And total income before taxes was only 4.3 billion.

If the stock ends the year at $70 and you want only a 10% return next year that's 7 bucks. The option expense of the stock going to from 70 to 77 would be in around 6.5 billion. To make up for this expense the earnings would have to increase from 4.3 billion by 50% just to break even. That's only a 10% increase in the price of the stock. This problem isn't going away. It's a collar on the stock. I can't believe the longs of this board don't see this as a major concern for long term investors.
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