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Technology Stocks : Cisco Systems, Inc. (CSCO)

CSCO 77.04

-0.5%

Dec 31 3:59 PM EST

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To: rkral who wrote (59708)	6/7/2002 4:48:55 PM
From: RetiredNow	Read Replies (1) of 77400

Hi Ron, I disagree with your points # 2 and # 3. As for #2, Cisco's earnings are NOT overstated just because they didn't expense the options grants in their income statement. The truth is that this is accounted for in Earning Per Fully Dilute Shares, which most analysts use when calculating PE etc. So if they were to begin expensing the options, I would argue that they should then not include the dilutive effect in calculating the number outstanding shares. As for # 3, that's a leap to say you and I are paying extra taxes just because Cisco is taking advantage of a perfectly legal tax loophole. Granted Cisco is paying less taxes due to options grant expenses, but even if they recognized the expense on the income statement, they would still get the same tax benefits. That in no way affects what you and I pay to the IRS. If the IRS wants companies to not be able to deduct options expenses on their returns, they should close that loophole. Simple as that.

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