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Technology Stocks : Cisco Systems, Inc. (CSCO)

CSCO 76.07

-1.1%

Dec 1 3:59 PM EST

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To: Boca_PETE who wrote (64534)	9/15/2003 1:27:51 AM
From: PerryA	Read Replies (1) of 77400

True only when that value is COMPANY VALUE. A company can only give what is theirs to give. such options have ZERO VALUE at the date they "are given" to employees. You are way, way off on this one. Have you ever purchased an at-the-money option? they are NON TRANSFERABLE (cannot be sold), from the date of grant through the date of exercise. Because of this latter issue, assigning a "value' to them based upon the model used to value options that are freely traded is a farce in my opinion. I am pleased to say I agree completely. A discount would be required due to the restrictions. To record an expense on the company's books for an outlay that is not made by the company and never will be is a distortion - a fiction - a farce. You are confusing cash with expense and financing activity with operating activity. Recording options which have value as compensation expense would affect the income statement; but since an options grant also involves financing activity, it would not affect the cash flow statement (bottom line, I mean). WHO PAYS THAT COMPENSATION to me IS THE CRUCIAL FACTOR Shareholders do not grant options. You are still confusing the financing part of an options grant with the compensation part. I have been a shareholder of many companies and have never as a shareholder been involved in the granting of options. If the company sold the options (as a public offering) and gave the cash proceeds to the employees instead of the options, there would be absolutely no difference to the company. Net effect on cash flow is zero -- same. Net effect on potential dilution -- same. Yet, having given cash to the employees, they would have an expense. Think about it. Regards, PerryA

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