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

To: GST who wrote (60745)	8/6/2002 10:21:40 PM
From: aladin	Read Replies (3) \| Respond to of 77400

GST, From another discussion: Options are not an expense in any traditional sense because they will never require a company to sacrifice its existing resources. An options ?expense? neither uses cash nor consumes stockholders? equity. In fact, the company will generate cash resources when the options are exercised.... Remember how outrageous it seemed just a few months ago to read that telecom companies were recording as revenues virtually identical bandwidth traded without any associated cash inflows. Doesn?t it seem equally dubious to record an expense that the company will never pay? To put it simply, stock options would be a pretend expense that the company would never, ever be paid by the company. How do you respond? John

To: GST who wrote (60745)	8/7/2002 7:51:41 AM
From: RetiredNow	Respond to of 77400

Then I'm thinking that we shouldn't report fully dilute shares until options are exercised. If we are going to expense them, then we should show only basic o/s shares until options are expensed. In addition, we should have a reserve account against which market stock price fluctuations are accounted for. But that's going to make for a lot of earnings volatility.

To: GST who wrote (60745)	8/7/2002 11:28:25 AM
From: hueyone	Respond to of 77400

You know very well that options are compensation -- to say other wise is pure BS -- the issue is how to account for them, and on that score there is room for debate. There is no consensus on the best method of valuation. But that is historically true of most things that are accounted for. It takes time for principles to be applied correctly and for standards to form. But people who flat-out argue against expensing options should be completely ignored as they have nothing to add to the debate. Options are compensation. Compensation is an expense. Expenses belong on the profit and loss statement. All the self-serving statements of all the tech CEOs in the world -- JC included -- are worthless if they are unable to honor these basic facts. Very well spoken. Best, Huey