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Technology Stocks : Cisco Systems, Inc. (CSCO) -- Ignore unavailable to you. Want to Upgrade?

To: kvkkc1 who wrote (60416)	7/24/2002 10:47:36 AM
From: Stock Farmer	Read Replies (1) \| Respond to of 77400

Screwed to wall with false accounting? I don't think so. If you look at what options actually cost during the same period, the company still got a good deal. The company paid no taxes for the last gosh-knows-how-long. That's a reduction in EPS to zero or less according to the books shown to the IRS (actual cost of options to whomever is paying option holders). Which is far better than the hypothetical black-scholes cost that they've shown on the books. When folks look at the actual cost of stock options (to whomever bears the cost), it's bigger than all of Cisco's earnings by about 50%. So they have a lot of being screwed by shareholders to go before breaking even in that department. John

To: kvkkc1 who wrote (60416)	7/24/2002 3:31:39 PM
From: RetiredNow	Respond to of 77400

Well, it would have been false expenses had they used the black-sholes model. But the model I like best is intrinsic value, which means you record the actual fair market value less the strike price on the books, then adjust it quarterly. The only problem with this method is that it makes for increased income statement volatility. Either way, I think what folks should focus on is that we look at trends over the long term. So if companies pick one method for accounting for stock options and then stick with it uniformly, we get to do good trend analysis as well as get to do apples to apples comparisons between companies. Either way, we get better information than we have today on the total compensation costs to the company.