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Technology Stocks : Cisco Systems, Inc. (CSCO)
CSCO 76.04-0.3%Nov 26 3:59 PM EST
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To: RetiredNow who wrote (63535)4/13/2003 3:06:13 PM
From: Lizzie Tudor  Read Replies (1) of 77400
 
Giving out options is rarely a statement by management that the company's prospects are good. Rather, they are an attempt to keep employees glued to the company.

Hmm I think you are oversimplifying the case mindmeld.

Giving out options can be a statement by management that things look bad now but the future looks bright, so please hang around when the turn comes.

The problem with options (or the beauty of them, whatever) is that they are most successful when granted at the worst possible time. If you grant after the turn, employees won't stay, and after the turn is precisely when you *want* them to stay.

If you really believe your business will turn, then dilution won't matter if profitability increases to the point where buybacks are a small % of the money you are bringing in.

I don't know if this sector (networking) will ever recover. But if it does, the toughest issue for cisco will be employee retention, NOT profitability. This is because the cuts during this decline (not just for cisco but for all technology) have been extreme. The domestic workforce is less than half of what it was in the bubble, many who left technology will never return. If we get a gradual recovery then fine. But if there is some kind of surge some corporate infrastructures will fail (not a statement on cisco just a general pov) imo.
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