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Technology Stocks : Cisco Systems, Inc. (CSCO)

CSCO 76.91

+1.1%

3:47 PM EST

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To: Stock Farmer who wrote (64569)	9/15/2003 2:45:02 AM
From: Don Lloyd	Read Replies (2) of 77400

John, Don, I don't think you understood my observation. You presented a fallacious argument when describing two companies, one which loses 10 M$ per year outright and the other which earns 10 M$ outright but also issues 20 M$ in share capital. No, I was and still am only interested in a single company, with two methods of accounting. Please concentrate on the one I specified at your request. It issues pieces of paper representing partial company ownership. I don't care what they're worth just as long as you enter $20M for a compensation expense on the P&L statement, and everything else is adjusted, if necessary, so that the bottom line is a $10M loss. The second accounting method is then simply to eliminate the $20M expense line, leaving a $10M profit on the bottom line. No shares are repurchased by anyone. And assuming insiders flipped their equity comp to shareholders every year, shareholders still own 100% of the company There is no reason whatever to assume this. This is merely a tool to dollarize a single year's effect on shareholders. Making the shareholders send good money after bad just creates a different problem. Regards, Don

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