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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Don Lloyd who wrote (83129)	8/19/2000 7:25:32 AM
From: Don Lloyd	Read Replies (1) \| Respond to of 132070

All - keywords - diabetes, diabetic, glucose monitor, lancet, blood sugar, insulin For information only therasense.com "... Virtually pain-free blood glucose monitor now available to people with diabetes..." "...The easy-to-use FreeStyle allows people with diabetes to take a blood sample from their forearms instead of their fingertips, eliminating virtually all the pain of testing and thereby helping to encourage more frequent testing..." I came across this entirely by accident the day after asking my doctor if any such new devices yet existed and receiving a negative answer. Available with two day UPS shipping from the website. My initial experience is that now the most difficult part of testing is extracting the small test strip out of the bottle with clumsy fingers and not dumping the contents on the floor. -g- Private company, but IMO likely to be an IPO in the not too distant future. Regards, Don

To: Don Lloyd who wrote (83129)	8/19/2000 7:42:03 PM
From: Bilow	Read Replies (1) \| Respond to of 132070

Hi Don Lloyd; Re company founder donating land (or his time, for instance), I agree. If the company has a rent-free use of anything, land, intellectual property, natural resources, or what have you, it doesn't have to list it as an expense. The air you breath is free, and so are most of the beautiful things in life. But stock options are not free, a company can only give itself away once (i.e. 100%). After it does that, the old shareholders are bereft. One of the simplifications about my example is that it assumes full dividend payout of all cash flow. Instead, you can have the company retain dividends (as is currently the habit). The results are the same: Changing from a cash based compensation scheme to one of stock based does not change the net present value of the company, and shouldn't appreciably change the earnings. GAAP achieves this objective, that is, it doesn't cause big differences in reported earnings depending on how expenses are paid. This means that GAAP more closely models the long term viability of the business. You don't want earnings to fly all over the place due to minor changes in compensation techniques. (And believe me, as MSFT fails to appreciate, that company's employment compensation costs are going to radically change. Software engineers are not totally stupid, and will ask for higher wages and ignore what were once lucrative stock option offers when MSFT is perceived to be a slowly growing company. If they had reported their earnings according to the Black Scholes method of pricing options, the sudden decrease in earnings wouldn't happen. As it is, they've been undercounting their compensation costs by 33% or so, and they will have to pay the price of disappointing investors as they hire new employees at higher cash costs, and give raises to older employees vesting out.) We really need to talk about concrete examples, and not simply argue over the meaning of the words &c. Accounting is a practical, numbers oriented field, not a branch of theoretical philosophy. I appreciate your efforts in understanding my example. Even as simple as I could make it, it still is a complicated subject. I am reminded of long running discussions I have had over the subject of relativity. If you just look at the words that physicists use to describe relativity it can appear to be a nonsensical subject, with contradictions and arbitrary bizarreness. But if you take the trouble of working out examples, it turns out to be very clean and beautiful. Accounting is similar, in a lot of ways, though it is far simpler over all. In both cases you *have to crunch through the numbers* to see why it is constructed the way it is. Then the elegance and beauty becomes manifest. Sometimes it seems to me that you are more interested in the cash-flow of the company than its earnings. That is, stock based compensation does wonders for cash flow. This gives the company cash to grow itself or whatever. But the company could have got the capital by selling stock to new investors while paying cash to the employees. -- Carl P.S. Thanks for the diabetes monitoring info...