A Congressional bill introduced Wednesday could dampen the technology industry's widespread reliance on stock options.
Sen. Carl Levin, D-Mich., introduced Senate Bill 1940 in order to "plug a corporate tax loophole" that allows companies to claim large tax deductions without declaring the cost as an expense on earnings statements. Co-sponsors of the bill, which must first get approval from the Senate Committee on Finance as well as the House of Representatives and ultimately the president, include Sen. John McCain, R-Ariz.; Sen. Peter Fitzgerald, R-Ill.; Sen. Dick Durbin, D-Ill.; and Sen. Mark Dayton, D-Minn.
Supporters say the bill, if passed, would require companies to make accounting changes that would result in clearer annual earnings reports....
...Microsoft would have posted $5 billion in net profits last year if it accounted for the stock options-based compensation in their actual earnings, as opposed to the $7.3 billion it reported without having to account for the options.
And Intel may well have reported a loss.
Note that Intel "bought back" 133 million shares last year, while the number of shares outstanding dropped by only 25 million. Which may indicate that 108 million shares (at a cost of about $3.2 Billion dollars) were "off earnings statement" costs.
Claimed earnings before taxes for Intel were $2.2 Billion, but that's without including their "off earnings statement" costs.
Expect to see some comparisons of earnings under pre-enron rules and post-enron rules.
Which could show that Intel has been losing money - and that's without taking into account the increased valuation they've been assuming for their PP&E even while the market value of that PP&E and the revenue it can generate has been falling. |
