If it really is no big deal, then why won't Cisco expense them?
I'm not saying its not a big deal, I'm just saying that the benefits outweigh the costs.
Remember a few months ago I told you the 2 alternatives wrt options. One was keep options and don't expense. The other was the "offshore dump". Well guess what, most companies took the latter option. Cisco has also offshored a substantial portion of their staff, but they have not totally dumped R&D- yet. Cisco now has far fewer US employees than they used to. This information is hard to get because companies don't like to disclose it, it is bad for goodwill. My view is that Cisco is down to about half of their peak SV employees now, just an unscientific estimate. This is how I know stock options grants are declining, Cisco used to grant all employees options. They don't do that anymore but even if they did, they've offshored half the company. Also, line level staff have been turned into "managers" of these offshore teams (with no promotions), which is some kind of hell I can assure you. The reason GMs at cisco and other companies are so high are due to these structural changes, which are extremely hard on staff. Ask yourself if you would want an accounting job, which was compensated as if you were Joe accountant, but really you had 10 offshore people working for you that knew nothing about US accounting, and your role was to "manage" this team? This is the end of the line on profitability and cost cutting at Cisco. If investors aren't satisfied with the pay scale Chambers has designed the next step is the total offshore dump ala Oracle. There is nothing more to squeeze. Remember if you do the total offshore dump there is the danger that your market will go offshore too. Thats what happened to oracle, they offshored themselves out of their own market, so there is a large risk to shifting all R&D offshore.
There is an indian stock market I believe, some people may want to invest there is they are not satisfied with US pay packages. They don't give out stock options. Perhaps those that are unhappy with Cisco as an investment may want to look there. |
