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Technology Stocks : Cisco Systems, Inc. (CSCO) -- Ignore unavailable to you. Want to Upgrade?

To: bambs who wrote (41317)	10/23/2000 12:53:34 PM
From: The Phoenix	Read Replies (1) \| Respond to of 77400

Well.. seems to me that what Parish is arguing when he suggests that CSCO has 8.5B shares - is he not? He's suggesting that CSCO will "print" more shares... and cause a dilutive effect to the stock. Is this an expense and is this an expense equal to the exercise price less the cost basis??? If CSCO doesn't "print" more shares... where in the heck is Parish getting his 8.5B number from when the outstanding shares is 7.xB?

To: bambs who wrote (41317)	10/23/2000 1:01:08 PM
From: GVTucker	Respond to of 77400

bambs, RE: Are you arguing that if CSCO just prints shares a billion shares and sells them to employees at a cost of say $25, it's a good thing? Why don't they just print 10 billion more shares and give them to employees for 1 cent. Then they will insure that they will never have to pay tax ever. It's not a good or bad thing. It is dilutive, and that's why it should be included as a cost. The place where the logic breaks down is when estimates of the cost of the option increase as the stock price increases. There is only a cost to Cisco, IMO, when the option is granted. After all, if we want to recognize this as an expense, then the best way to do it is to expense it when the option is granted. The fact that the stock price increases subsequently is irrelevant to me. After all, once you account for it once, it doesn't cost either Cisco nor the shareholders anything additional. Accounting for it this way the net additional options granted/assumed during the year was 295mm at an average strike price of $52.10. I'm guessing that this would cut Cisco's pretax income about $885mm or so. For an indication of the relative numbers, Cisco's EBITDA in FY2000 $5,471mm