Microsoft never reported options as income of course.
Obviously, if Microsoft had to report option grants as an expense, their reported profits would be much lower. Their actual profits, cash flow, balance sheet would be completely unchanged because option expense is a hypothetical or imaginary expense. Unlike most expenses, when options are expensed, no checks are written, no money changes hands.
If you really want an answer to your question consult Microsoft's annual reports. All public companies in the U.S. include earnings numbers if options were expensed in their annual reports.
The danger of expensing stock options is that it creates a dangerous link between the company's earnings and its stock price. Companies whose stock has a lot of volatility (up or down) would have bigger stock option expenses than those whose stock price is more stable, given identical grants. A company's earnings should be independent of its stock price. But by expensing stock options, a company's stock performance suddenly influences earnings, and earnings, as always, influence a company's stock price. Clearly with each influencing the other you have a unstable feedback loop which, rather than clarifying a company's performance and health, makes it practically inscrutable. |
