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

To: The Phoenix who wrote (47788)	2/2/2001 11:52:29 AM
From: bambs	Read Replies (1) \| Respond to of 77400

If CSCO sells calls they are betting the stock goes down. When investors see this they will sell their common or go short taking the stock further down. This activity has nothing to do with dilution this is perception. Of course the end game here is to buy them back at a lower price...... if Cisco believes the stock will recover... which we assume at some point Cisco believes the stock will recover. they don't have to bet the stock is going down...they are just selling the right to buy stock. they will get some money for that right up from, even if it doesn't go up they still have that money. Then they print the shares when the option is exercised by the purchaser and collect the funds. The only cost is dilution. Think about it...re-read my last post.

To: The Phoenix who wrote (47788)	2/2/2001 11:58:40 AM
From: bambs	Read Replies (1) \| Respond to of 77400

how about this? instead of giving the options to employees they sold the options on the open market and gave the employee the proceeds from the sale as a bonus. Then the employee could buy the options back on the open market around the same price if they wanted to. What effect would that have on the accounting? What does it matter if they give the options to employees or sell them on the market? If they print the shares later what does it matter. What is an employee going to do differently with the option over the long term that the person that bought the option on the open market would do? The options exist. The options have a value. The cost of giving them is what they would be worth if they were sold on the open market at the time. That needs to be expensed in my opinion. bambs