Cisco Systems, Inc. (CSCO) Message Board

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Technology Stocks : Cisco Systems, Inc. (CSCO)

CSCO 83.12

+3.1%

Feb 3 3:59 PM EST

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To: Stock Farmer who wrote (67901)	5/18/2005 9:19:36 AM
From: RetiredNow	Read Replies (2) of 77400

Yes, but this is a classic case of short term gain exchanged for long term pain. They sell the securities for $1 when they are worth $3. Impacts: * low expense #, higher earnings => creates motivation to continue large dilution => lower EPS over long term => impact shareholder (including employee option holders) negatively * selling low => less cash than FMV would imply => short term gain from higher earnings, long term pain from selling Cisco to outsiders on the cheap, giving the bankers the lion's share of the profits, which are transferred from shareholders and from employee option holders Neither scenario seems worth it. By selling cheap, they would be creating downward pressure on the stock price, which negates the advantages of giving stock options to employees in the first place. In fact, many would argue the stock is going nowhere fast right now, BECAUSE of the continued massive dilution. I for one bought stock in Jan with the belief that enforced options expensing would change behavior to lower the dilution levels, which would increase EPS growth rates, benefitting shareholders as the stock price rose.

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