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Technology Stocks : Advanced Micro Devices - Moderated (AMD) -- Ignore unavailable to you. Want to Upgrade?

To: Charles Gryba who wrote (85853)	7/26/2002 10:02:29 AM
From: jjayxxxx	Read Replies (2) \| Respond to of 275872

I'm sure this will help 'lousy' coverage of AMD by the analysts... (no matter how correct he is) JJ infoworld.com *CEOs say keep politics out of corporate reform* By Ashlee Vance July 26, 2002 5:48 am PT PALO ALTO, CALIFORNIA -- Two top technology executives called for the U.S. government to take a cautious, logical approach to improving corporate accounting practices in the wake of recent scandals and pleaded the government to keep politics out of the reform process, during a gathering Thursday in Silicon Valley. Hector Ruiz, president and chief executive officer at Advanced Micro Devices (AMD), and Edward Barnholt, president and chief executive officer at Agilent Technologies said their companies would follow any mandates set forth by the government to improve accounting but warned such decisions should not be made in haste. Attacks on the way stock options appear on financial statements, for example, are already often out of line, the executives said. The executives were speaking during an event hosted by The Churchill Club at a hotel in Palo Alto, Calif. "The one [criticism] that is at the top of the list right now is the issue of stock options," Ruiz said. "People are rushing to conclusions about what exactly we are doing, and what it means. My fear is that today it's very politicized, and we have to be careful about that." The well-documented financial scandals of Enron, WorldCom and other companies have prompted the government to call for more accountability among top executives for a company's accounting practices and for clearer financial statements. One reform politicians are calling for is that companies' expense stock options -- that is, treat options as a corporate expense -- and report the cost of options on their income statements. For companies in Silicon Valley that have depended on stock options to attract talent, this proposal does not have the greatest appeal. "There is a notion that stock options are a U.S. phenomenon, a Silicon Valley phenomenon and a CEO or executive phenomenon," Barnholt said. "But 90 percent of stock options go to the employees." Stock options are key to retaining talent in the U.S. and Asia, Barnholt said. Without such incentives, the U.S. could lose its best workers to overseas companies, he warned. "I don't think it makes sense to expense stock options," Barnholt said, saying that stock prices are based on investor subjectivity and should not be included with core business financials that better reflect the state of a company. Some of the uncertainty surrounding companies' accounting practices could also be removed if analysts did a better job, Ruiz said. "It's a shame that one area that is not getting any attention is the tremendously lousy job that analysts in the industry are doing in explaining to investors what a company is all about," he said. "The analyst community has just done a pathetic job of trying to explain all of the issues to investors." Ruiz and Barnholt said that less than 1 percent of companies engage in unscrupulous accounting practices and that the government and public should keep the limited scope of the problem in mind when debating reform. The two executives also said that board members should be called upon to keep a close eye on a company's operations but added that regulating the amount of options a board member receives or curbing his or her investments in a company would not make sense in most cases. Overall, Ruiz and Barnholt asked that politicians stay out of the boardroom and allow companies to regulate themselves and suffer the consequences or benefits of their own actions. Ashlee Vance is a San Francisco-based reporter at IDG News Service, an InfoWorld affiliate.