In Q1 of this year, an additional $156 million was generated. (Operating cash flow - capex - tax benefit)
Well, that's an interesting perspective. Slightly incomplete, and the word "generated" is misleading. But the sums add up as you claimed.
Here's another perspective. Perhaps we walk through the cash flow statement line by line, thinking like an owner and just noting what each line means and how it affects our wealth.
OK, so Tom Siebel earns 64.6 M$ in earnings, that makes you richer.
He earned this while also recording 34.2 M$ of phantom Depreciation and other Amortization expenses, so you're even more wealthy. Provided of course you take into account the 22.6 M$ worth of property, plant and equipment he bought while he was at it. You are now richer to the tune of 76.2 M$
Then he explains how he recognized losses of 2.2 M$ gambling in the stock market and gains of 4.4 M$ by discovering some of his customers aren't deadbeats after all. He also convinced the IRS to give back 0.5 M$ and when you add it up you're happy to hear he increased your wealth by 79.2 M$ during Q1.
Then he tells you that he transferred 76 M$ from Accounts Receivable, Accounts Payable, Prepaid and Other Accounts and Deferred Revenue into Cash. So you go to add in this other 76 M$.
Not so fast. He did this by reducing the asset value of each of these accounts accordingly. So while this gave you an additional 76 M$ in cash in one pocket, this cash came by liquidating assets you thought you had in other pockets. So you end up with 0 change in wealth due to this non-cash-pocket to cash-pocket flow of cash.
So after all of this, as a shareholder you are wealthier by a whole 79.2 M$
Now, those with sharp eyes will note some compensation expense due to options given out at below-market valuation, totaling 1.6 M$ and stock option tax credit of 10 M$. Assuming a tax rate of 35% makes a total cost to you of 17.0 M$ for stock options & stock option compensation. Remember, shareholders foot this stock option bill.
And thus this quarter Tom Siebel made you only 62.2 M$ wealthier.
Well, at least this time he saved some for you. If you did the same simple sums for the same quarter a year ago, you were in the hole by 32.3 M$
Same analysis for FY 2001, 2000 and 1999 gives a net enriching of shareholders of 49 M$, -244 M$ and -75 M$, mostly dominated by a total after-tax stock option compensation cost to insiders of approximately 550 M$.
Which is more than the retained earnings of the company by a long shot. Yup, Tom Siebel hasn't made a dime for shareholders yet. In fact, he has about a billion dimes to go before you break even.
Hueyone is not exactly misinformed in arriving at his extreme disappointment. Tom Siebel is doing a great job at making folks wealthy.
Shareholders? Well, they were. Briefly, in the moment between exercise and sale of their stock options.
John |
