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Technology Stocks : Cisco Systems, Inc. (CSCO)

CSCO 75.19

-0.1%

Jan 16 9:30 AM EST

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To: The Phoenix who wrote (47685)	2/1/2001 10:07:21 AM
From: Wyätt Gwyön	Read Replies (1) of 77400

Gary, have you ever heard that there is no free lunch? There is every reason to think that profligate issuance of options is harmful to shareholder value. This is obvious insofar as a shareholder's stake in a company is diluted by options. It is great for some secretary at DELL to make 10 million dollars off of options, but where does the buck stop? To the extent that market-value cash compensation is exceeded by options gains, existing shareholders are losing value. The manifestation in a company like DELL is that free cash flow must be diverted to share buybacks. In the case of Cisco, the manifestation is in the form of lower earnings per share in the long run.

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