Wind River going up, up, up! Message Board

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Technology Stocks : Wind River going up, up, up!

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To: J. Kerner who wrote (3294)	6/19/1998 9:58:00 PM
From: Michael Greene	Read Replies (5) of 10309

Did anyone notice the section "Pro Forma Disclosures" on page 38 of the annual report? This is the section now mandated by FAS 123 which requires a restatement of earnings with the fair value of employee stock options shown as if they were salary expenses. This Pro Forma restatement lowers earnings by 0.40 per share, a hell of a difference from reported earnings. Yes, yes --- I know that one cannot hire software engineers today without giving stock options, that this practice is widespread in techland, that Microsoft's earnings would be hit even heavier, etc., but in the end options are in lieu of salary and result in an understatement expenses. There should be at least some discounting of reported earnings because of this. I have tended to ignore this issue in the past for WIND because it was less significant. However this component of earnings is growing much faster than the earnings themselves and is now at the point that it seems to me that it deserves some discussion. Are there any opinions out there in addition to Mark Brophy's which we have heard in the past? Michael

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