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Technology Stocks : How high will Microsoft fly? -- Ignore unavailable to you. Want to Upgrade?

To: technologiste who wrote (71289)	7/17/2002 10:37:40 PM
From: jonkai	Respond to of 74651

Obviously, if Microsoft had to report option grants as an expense, their reported profits would be much lower. Their actual profits, cash flow, balance sheet would be completely unchanged because option expense is a hypothetical or imaginary expense. actually this is a common misconception, and can be easily looked up..... options being exercised generates cash flow for MSFT, so obviously Cash flow would be affected if options are changed in some ways... , by a very large amount actually, when you also add in the affect of the tax credit they also report as Cash flow from these options..... when the stock options are expensed (ESOs are after all pay to an employee).... just like giving them a car is pay....... but in the case of ESO's.... it's the stock holders who are doing the giving up their car to pay these employees with stock options........ MSFT gave away $17 billion dollars of your value as a shareholder in pure dilution to employees the last two years, with out a single dime of compensation back to you as a shareholder, either in the form of dividends, or extra share buy backs(above and beyond dilution) or new and higher earnings..... shareholders got the complete SHAFT with ZERO return... NONE........ as Alan Greenspan says, and Warren Buffett and everybody else that has half a clue... these companies need to start showing their true expenses to their shareholders, because the shareholders are already starting to catch on....... everyday another several hundred shareholders figure out that a third of MSFT's earnings were false earnings..... that is a scary thought.... jon.

To: technologiste who wrote (71289)	7/18/2002 12:19:06 PM
From: John F. Dowd	Respond to of 74651

tech: Good point. Additionally with respect to expensing the restating of options that go unexercised would cause havoc. Also it might be a source of abuse as a means of deferring taxes and manipulating earnings.JFD