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Technology Stocks : Wind River going up, up, up!
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To: J. Kerner who wrote (3337)6/24/1998 7:01:00 PM
From: Pirah Naman  Read Replies (1) of 10309
 
> I think some of the issues I raised are important in the calculation of pro forma >earnings and some might be offbase. Perhaps someone who is more of an expert in >FAS 123 would like to contribute.

Michael had it right when he wrote "Certainly the issues that you bring up are the important ones governing the eventual financial impact of the options but they do not appear to be germane to the calculation of Pro Forma earnings."

Pro Forma earnings calculations reflect an estimation of a cost of employee compensation which is (improperly, IMO) not included in the costs of production. The better the stock performance is, the greater the actual cost will be. The Pro Forma calculations only estimate the damage; the economic damage is quite real and it does affect the actual profits, and hence the value of the business. That is why this matter should be of concern to those who consider themselves part owners of a business. Even those interested only in stock price behavior should be aware, for the costs will not remain hidden indefinitely.

In the annual report it is acknowledged that this is likely to be exacerbated in the future. Perhaps somebody on this thread who is planning on attending might bring this up at the annual meeting?
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