Ron:
I also disagree with John's valuation of the cost to the company's shareholders of employee stock options, particularly the $10.656 billion "fair market value" and the "vanished" $7.544 billion he arrived at for 2000/2001 in this post:
Message 17104914
If the current climate actually leads to changes in GAAP or IRS rules for charging the "fair value" of employee stock options as an operating expense, thereby reducing reported operating profits and EPS, it's a reasonable certainty (unless JS holds some position of authority that will allow him to write the rules <g>) that any new rules adopted will not use John's simplistic "fair value" method, which produces numbers inflated by more than an order of magnitude.
Using a more appropriate (IMO) approach - one coincidentally similar to an approach suggested by Mucho here - that reflects the fact that employee options have varying vesting periods and exercise prices, and that their value is affected by a number of factors such as expected life, stock price volatility, etc., the company provides the following (negative) impact on GAAP net income and EPS:
FY Effect on:
Net Income Diluted EPS
2001 $167,124 $0.22
2000 $100,167 $0.14
1999 $ 51,779 $0.08
1998 $ 50,785 $0.08
Not insignificant numbers to be sure, but far less than John's results - the impact for 2000/2001 combined would have been $267 million, versus John's estimate of $7.544 billion, which inflates that number by a factor of over 28.
Do you think the thread can stand any more of this topic? Let me know if you would rather use PM.
I'd be glad to add my two cents worth on this (particularly the FY2000 numbers), though I don't know how a 3-way would work via PM.
From the sounds of things, it looks like those who have had enough of this subject already have John on "ignore", so maybe it wouldn't be that much of a distraction (<g>)
David T. |
