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Technology Stocks : Cisco Systems, Inc. (CSCO)
CSCO 75.46-3.7%3:59 PM EST
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To: Lizzie Tudor who wrote (67255)3/9/2005 4:25:16 PM
From: Stock Farmer  Read Replies (1) of 77400
 
Expensing options for startups is catastrophic and its silly to debate otherwise.

Call me silly, but I beg to disagree.

The folks who deal with startups are considerably more sophisticated than you appear to give credit for. And as GV pointed out, you don't even seem to have noticed Google recorded option expense, even while holding Google up here and elsewhere as evidence of a good thing that would be horribly ruined if option expense was recorded.

Sure, if option expense isn't properly recorded then retail investors might actually overpay for startups that successfully IPO.

Is that a bad thing? I suppose that depends on your perspective.

Let's take an example of the used car market. Most people who buy used cars aren't mechanics. While there are a lot of things they can examine, one of the few things they actually know to look at when buying a used car is the odometer. And folks would pay more money for a car with only 30,000 miles than a similarly equipped make and model with 130,000 miles. For good reason.

Now what if you go down to the Nancy and Jack Used Car Lot, where their practice is to look the other way if folks bring in cars driven with the odometer intermittently disconnected? Is this a good thing? Sure it is...

... for the folks who are selling the cars. But the poor suckers who buy "low mileage" cars might not be getting the deal they think they are paying for.

If the name of the game is to trick as many suckers out of their cash before the jig is up... well, you're right: expensing stock options would be a catastrophic blow.

Is that what you mean?
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