Hey John. Yeah, my first post was knee jerk. But my second post, which I'm sure you've read by now, recalculated the effect to be $171 assuming a 30% tax rate (then of course take out the tax benefit). My bad. Still fairly low number, though. As far as the other options overhang, that is a concern, but I don't believe those should be expensed. My own personal opinion is that in the money options should not be expensed until a gain is realized. They should be treated as dilutive, which they are today. Then when they are exercised, they should be treated as an expense exactly as you and I have calculated. That would be a logical and consistent way of handling options and it would satisfy the demand for an accurate and measureable way to account for options.
Anyway, I am a big proponent of expensing the real cost of stock options. I think not doing so is an ongoing fraud, albeit legal in today's world.
BTW, don't think I've gone long on this stock. I bought a couple of weeks ago at $13.40 and plan to sell right around the earnings release. I'm hoping for another pop like we had last quarter, which I think we will get if Cisco doesn't screw up and fail to meet the estimates. However, I am confident because ML did channel checks and Cisco's suppliers seem to be seeing a rebound. So when we get that pop, I'll sell. That's very short term investing, or gambling if you prefer. :) |
