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

To: The Phoenix who wrote (47685)	2/1/2001 9:52:34 AM
From: GVTucker	Read Replies (1) \| Respond to of 77400

Phoenix, RE: John's assertion that optionee's gain at stock holders expense has no support. If you read the Economist article that I posted yesterday, it supports John's assertion.

To: The Phoenix who wrote (47685)	2/1/2001 10:07:21 AM
From: Wyätt Gwyön	Read Replies (1) \| Respond to of 77400

Gary, have you ever heard that there is no free lunch? There is every reason to think that profligate issuance of options is harmful to shareholder value. This is obvious insofar as a shareholder's stake in a company is diluted by options. It is great for some secretary at DELL to make 10 million dollars off of options, but where does the buck stop? To the extent that market-value cash compensation is exceeded by options gains, existing shareholders are losing value. The manifestation in a company like DELL is that free cash flow must be diverted to share buybacks. In the case of Cisco, the manifestation is in the form of lower earnings per share in the long run.

To: The Phoenix who wrote (47685)	2/1/2001 10:42:13 AM
From: PMS Witch	Read Replies (3) \| Respond to of 77400

Please explain further how JS's assertion is in error. Looking into the matter superficially, one finds evidence supporting his position. Have important considerations been disregarded? CSCO investors must have confidence that their company's practices are sound, and that some serious rot isn't hidden beneath the attractive veneer of continually escalating stock prices. I'm trying to form an accurate assessment of the matter, and find the debate instructive. I also believe that if enough loot comes pouring in through the door, a little leaking out through the window won't matter much. I'm not about to grip the pennies so hard my hands get too sore to hang onto the dollars. I also have tremendous respect for CSCO, their management, and their employees. (I don't find their TV adds attractive.) Cheers, PW.

To: The Phoenix who wrote (47685)	2/1/2001 1:03:51 PM
From: chic_hearne	Read Replies (1) \| Respond to of 77400

John's assertion that optionee's gain at stock holders expense has no support. OG, I just don't understand what you're trying to say. For example, say the employee exercises 10K shares at a $10 strike and sell for $40. That's an outflow of $400K from Cisco stock. An inflow of $400K will be needed to match the employees sale. If the employee hadn't exercised, that $400K inflow would cause an uptick in Cisco stock, but instead it is needed just to keep the price stable. It sure seems to me that current shareholders lose out EVERY SINGLE TIME an employee exercises. [I'm speaking strictly in terms of manipulation of stock price] chic