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Technology Stocks : Cisco Systems, Inc. (CSCO)

CSCO 72.10

+1.4%

Nov 10 3:59 PM EST

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To: fedhead who wrote (63733)	4/25/2003 11:53:39 PM
From: hueyone	Read Replies (1) of 77397

I agree that the free market will eventually take care of the options issue, but so far there is scant evidence of any slowing down or pull back on the grant rates, and what is arguably "repricing" has been going on through most of the tech fall (although many companies wait the required six months and one day to avoid triggering reporting an expense). Consequently, management is selling the future of many of these companies down the road imo. The hurdle for meaningful return to the many potential outstanding shares in the future gets higher and higher. In some respects, accounting for stock options is an issue of national importance. Inflating reported earnings results, has resulted in flow of capital to undeserving companies, and distorted the efficient flow of capital in our free market economy. We have tech companies that deserve to be bankrupt just hanging on---hampering what could be better results for the companies that are better managed and more productive. Capital needs to flow to productive, efficient enterprises---not enterprises reporting trumped up results. Expensing stock options will make for more transparent comparisons of companies performance as well as nudge some companies who have gone overboard with options in the past to be more conservative with their grant rate in the present and manage more for shareholder value. Sure, the free market will eventually accomplish this, but we can start addressing this accounting inconsistency now and start turning things around, or we can wait for the free market to eventually grind these companies down and take care of the problem years down the road imo. I say let's address the accounting problem now. JMHO, Huey

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