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Technology Stocks : Qualcomm Incorporated (QCOM) -- Ignore unavailable to you. Want to Upgrade?

To: rkral who wrote (114197)	2/24/2002 6:03:26 PM
From: Stock Farmer	Respond to of 152472

Elegant brevity. Bravo. Now the excellent question you raise: is the appreciation in the call option actually compensation or not? I suggest it's the "actual" compensation. Versus the "hypothetical" compensation that some model like Black-Schoales might have put on the option when it was granted. What we have here are two costs. The first is what the company intentionally gives up (the expected value of the option). This doesn't appear anywhere on the cost ledger. The second is what they actually end up giving up (the realized value of the option). This doesn't appear anywhere on the cost ledger either. So whether or not the value is to be measured at grant (hypothetical) or at exercise (actual), in either case we should expect to see something show up. And yet we see zero. Indeed, we see a benefit to cash flow!!! John