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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Bob Rudd who wrote (11335)	10/22/2000 2:56:14 PM
From: Bob Rudd	Respond to of 78618

MSFT<<Everyone sounds thrilled with earnings, but it looked like operating earnings were flat and gains came from non-operating>> Barrons' Andrew Bary is saying similar and then some about MSFT earnings quality. I recall a prior CFO responding to question about when MSFT might be a sell by saying, essentially, when they moved from conservative to aggressive accounting. Relatively speaking, I believe that move is underway. That's why I treated this as a trade. On a similar note, Abraham Briloff piece on Cisco in Barrons is a 'don't miss' if you're interested in accounting analysis. Related to that, if Cisco takes a share price hit, it will also show up as reduced cash flow because the difference between share price and employee stock option strike price is a tax deductible, non-cash expense that kicks out a cash tax benefit equal to the expense x marginal tax rate. Lower share price means lower expense and lower tax benefit. I think about 44% of Cisco's FY 2000 Cash flow can be traced to this, so it might be material to those that use cash flow based valuation approaches.