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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: Mike Buckley who wrote (50496)	2/24/2002 6:24:36 PM
From: hueyone	Respond to of 54805

However, if Congress changes the law about the required treatment of stock options, I suspect that the companies that have more cash and generate more free cash flow with which to offer higher compensation plans will be at a competitive advantage over those that don't. Also, companies that can remain sufficiently profitable on an earnings-based basis while accounting for the annual ongoing costs of stock options will have a competitive edge over those that don't. But I think it's a huge stretch to say that high-tech companies can't survive unless they offer stock options to their employees. Sounds good to me. Best, Huey

To: Mike Buckley who wrote (50496)	2/25/2002 12:52:09 AM
From: EnricoPalazzo	Read Replies (1) \| Respond to of 54805

But I think it's a huge stretch to say that high-tech companies can't survive unless they offer stock options to their employees. Well, yes and no. SAP (the example you cite) is a german company, and thus competes in a different labor market (I'm aware that SAP has some US employees). My point is that given that most US high-tech companies give out options, we're not going to find many Gorillas (or candidates) worthy of investing in that don't give out options. Given that, I don't pay too much attention to it. Certainly, at some point in the future (e.g. if the stock market stays in the doldrums for a long period of time), employers may well move towards a more cash-based compensation plan (in fact, Microsoft has been unofficially moving in this direction for several years). But at the end of the day, I don't see stock options as a major factor in which companies we should invest in, which is all I care about (in the context of this thread anyway). As for whether congress will change the law and will it affect valuation? Well, I guess it might, but I don't handicap legislation (I've tried my hand at handicapping court rulings w/ RMBS, and you know how that went...). Sounds like rule #10 stuff to me. Ethan