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Technology Stocks : Cisco Systems, Inc. (CSCO)

CSCO 75.19

-0.1%

Jan 16 3:59 PM EST

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To: RetiredNow who wrote (65075)	11/18/2003 6:24:13 AM
From: rkral	Read Replies (1) of 77400

mindmeld, the $327MM after-tax impact of options for F1Q04 was very predictable, as you know. It had averaged $349MM per quarter for the prior 16 quarters. The amortization of option grants of prior years causes a freight-train-like momentum. Consistent reduction of grants .. for many quarters .. is required to change the speed of this train. Unfortunately during this last quarter, Cisco put the pedal to the metal. Cisco granted 147MM options with a fair value of $8.52 per option share. With no allowance for cancellations, that's $1,252MM of future option expense. The scenario is like you or I paying off $327MM of debt one day .. and then taking on $1,252MM the very next day. It doesn't get us where we would like to be. Hopefully, the first quarter will not be typical of the entire fiscal year. Regards, Ron P.S. There were no acquisitions, so none of the 147MM options were assumed. They were granted.

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