SEBL .. 300% reduction in net income due to options
So including the after-tax effect of option grant (SFAS 123), and excluding the after-tax effect of option exercise (tax benefit), the reported GAAP net income is reduced by $766 million. Wow! That is a 300% decrease.
Expressing the reduction in net income (per above) as a percentage of reported income can easily become non meaningful. (Examples, income goes to zero, the percentage becomes infinite .. or negative, then % negative too .. just not useful.)
So let's measure the "stock option expense" against revenue .. an option expense to sales ratio (OESR), if you will, .. like when people use PSR instead of PE ratio. For SEBL, that number is 37%.
*For SEBL's 2001 fiscal year, inclusion of all option expenses would have meant 37% of revenues had no chance to reach the bottom line.*
How does that compare to other companies? Here are OESR numbers for some tech companies I follow:
SEBL -- 37.8% -- ((254,575+467,224+53,800)/2,048,401)
QCOM -- 9.7% -- ((715,867-548,743+92,051)/2,679,786)
CSCO -- 15.5% -- ((2,705-1,014+1,755)/22,293)
ORCL--14.8%--((2,561,096-2,107,811+1,149,293)/10,859,672)
All numbers are from FY2001 annual reports. All numbers (except %) in thousands of dollars, except CSCO in millions of dollars. The numbers are looong because they are cut and pasted from annual reports to (1) reduce errors, and (2) let anyone interested perform a search for the numbers. Entire CSCO annual report on freeedgar.com cannot be searched. For CSCO, the numbers are from Income Statement, Table 24, and Table 39.
There is no attempt to include share repurchases, if any, in these option expenses.
*SEBL would appear to be out-of-line compared to others.*
Ron |
