Well, first of all I think options expensing proponents have to put something on the table for IPOs, at least. If they think options expensing won't matter, then that is fine, just lay it out there- take some successful IPOs from now and the past and compose the financials as if they were going out with options as an expense.
I know, and I'm sure you know, that if you expense options for IPOs, Google will look a lot like Pets.com. Any cash that a new company is generating is going to be dwarfed by these options expenses. It is the sheer magnitude of the expenses relative to other metrics that is the issue. For example take Amazon, a large company now, they can rise above options expenses with their cash generation at this point. But what about 6 years ago could they do that? No, I don't think so.
The question is, is this acceptable, and if not, what are the alternatives. There are some alternatives, for example allowing some sort of averaging of options expenses over time for new companies. What is the cutoff?
Nobody ever discusses the difficult issues on options they just rehash the same old stuff.
I know if I were John Doerr, and I wanted to block options expensing, I would take the Google financials to congress and lay it right out there. Probably the Cisco numbers from 92 might work too. Notice nothing is happening wrt options, there has been a delay, perhaps a stalemate? What do you think the issue is? I'll bet it is this. |
