Qualcomm Incorporated (QCOM) Message Board

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Technology Stocks : Qualcomm Incorporated (QCOM)

QCOM 165.07

-1.0%

3:59 PM EST

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To: Stock Farmer who wrote (119012)	5/20/2002 2:59:16 PM
From: Peter J Hudson	Read Replies (2) of 152472

John, <<If you would like to go back and adjust the discussion and insert "fair value" (or whatever term you like) for every place I have used "market price" and thus be technically correct, feel free. The discussion would be closer to the mark.>> You not only use market price in your discussion, you use market price in your calculations. My disagreement is with your calculation of cost to shareholders. Taking market price appreciation from the time of grant to the time of exercise and calling it cost. You don't show how it costs the shareholder. You use lines like "where do you think that value came from" the reasoning is, if the option holders gain the shareholders must lose. I disagree. The dilution reduces shareholder % of ownership. If you are going to use market price to quantify that dilution you must show the decrease in market price caused by the increase in number of outstanding shares. Cost to shareholders must be demonstrated by a decrease in the value of their holdings. The reduction of % claim on company assets is real and finite. << Anyway, does this mean however that you buy into the concept? That if a company issues shares and receives less than 'fair value' that the other shareholders bear the difference as a cost of dilution?>> I have always agreed that employee options are dilutive. I also agree that they are a form of compensation that needs to be accounted. I think the distortion that occurs from options not showing on the balance sheet as an expense, and accounting for the dilution that will happen at exercise, are for the most part separate issues.

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