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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: StanX Long who wrote (56256)	11/26/2001 4:03:14 AM
From: StanX Long	Read Replies (1) \| Respond to of 70976

11/26 03:08 Stock Options' Decline Leaves Workers, States Struggling By Loren Steffy quote.bloomberg.com Dallas, Nov. 26 (Bloomberg) -- Stock options, which U.S. companies embraced during the bull market, are in deep trouble. And the pain is spreading. The pay of 15 million Americans who receive options is dwindling while their options-related tax bills rise. State governments, many of which count on revenue from employees' options sales, will report the smallest revenue gain since 1990. Companies are losing tax benefits from options that are now worthless, and they're drawing shareholder wrath when they issue new ones. ``The ramifications are just all across the lot,'' says Ann Yerger, director of the Council of Institutional Investors, an association of 120 pension funds with $1.5 trillion in assets. ``We've come to the end of the options rainbow.'' Consider the impact at Cisco Systems Inc., the No. 1 networking equipment maker, which awards options to all of its 38,000 employees. When Cisco's sales began to slump in 2000, options at first masked the decline, says Christian Koch, a senior technology analyst at Trusco Capital Management. Without a $985 million tax benefit from the stock option program, Cisco's operating cash flow would have plunged by almost half, Koch says. He spotted the red flag and in October 2000 advised Trusco to sell its 6 million Cisco shares. Employees Not As Fortunate