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

To: hueyone who wrote (118976)	5/19/2002 6:43:14 PM
From: Clarksterh	Read Replies (1) \| Respond to of 152472

Huey - The FASB tried to institute accounting for stock options in both the income statements and balance sheets eight years ago, but were shut down by outside political pressure ---mainly emanating from those beneficiaries of stock options. The write-up by Stiglitz is not entirely accurate, since with SFAS 123 the FSAB did manage to make sure that Qualcomm et al do have to report Pro Forma results as if the stock options had been bought on the open market. It is there and very easy to find and interpret if you are looking for it. I'll state again that, IMO, the problem with reporting it as an expense is: 1) It is double booking if they are also showing diluted shares. And, IMO diluted shares is an easier way to think about it as long as the details of the kinds of options outstanding (strike price, expiration date) is reported at least once per year (as it is). 2) Newly issued options really are a very different beasty than most earnings statement items. For everything else in an earnings statement, over time cash flow and earnings average out to the same thing. For newly minted stock options this isn't true. It will warp earnings without affecting cash flow, which should tell you that something is at least suspect with the concept. Clark