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To: LLCF who wrote (30385)	10/23/2000 9:47:42 AM
From: Perspective	Read Replies (2) \| Respond to of 436258

Consider these two cases: 1. CSCO issues 100M new shares in a public offering, raising $5B in cash and adding $5B market cap. They take the $5B cash and go buy ArrowPoint. 2. CSCO issues 100M new shares for a merger, adding $5B in market cap. The shares are issued as part of a pooling of interests transaction with ArrowPoint. Case 1 - is there any doubt that they've blown a huge wad of cash on ArrowPoint? They take the appropriate charge for it. Case 2 - no charge taken. These two cases are IDENTICAL from a shareholder perspective with the minor difference that the shares trickle onto the market in case two as opposed to the sudden appearance in case one. The dilution is immediate and identical in either case. No, dilution in itself doesn't adequately reflect the cost of something. Dilution happens because shareholder equity was acquired and disposed of. That expenditure must be reflected in an accurate accounting of the transaction. BC