Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Lizzie Tudor who wrote (60753)	8/6/2002 11:51:36 PM
From: hueyone	Read Replies (1) \| Respond to of 77397

I hope you aren't assuming that those in SV that are against that black sholes method are in it for personal gain. I should have specified hi tech employees. I think it has been a pretty good deal to be able to get slices of your employer's company without having to report to the rest of the shareholders of the company what this activity is costing them. I assume that people that have been beneficiaries of such a system (or expect to be beneficiaries in the future) will fight to keep the system going---like they did in 1994 and like tech lobbyists are doing right now in Washington DC. Here are some notes from the call, an analyst asked about options expensing... It is hard to comment on those comments without more specifics. Perhaps he is comparing the value of stock options as calculated by the difference between strike and market for options exercised in 2002 with the Black Scholes estimates. If so, this is largely a smokescreen argument. Black Scholes cannot predict which years the options will actually be exercised and the argument works both ways. For example, I believe if you take a look at Oracle for fiscal year 2001 when Larry exercised those options worth 705 million, the Black Scholes numbers probably underestimated the expense from stock options exercise. In addition, the value of the options, as estimated by Black Scholes, are amortized over the vesting periods, and hence, Black Scholes estimates included in the 10K in any one year are comprised of options granted in multiple years and will rarely ever match the actual realized value of options exercised. Having said that, I would think there may be a temporary, larger than usual dislocation between the long run Black Scholes estimates and actual realized values caused by the bubble popping, and that is why I suggested a phase in of Black Scholes expensing in my previous post. Larry- we will be disclosing FY02 Black Sholes. Every qtr cisco will disclose Black Sholes calculations going forward. That will be a significant improvement over most companies which make investors wait until the 10K comes out once a year, but not an improvement over companies who are coming forth to directly expense stock options on their quarterly income statements right now. I suppose Cisco will give us the numbers in the footnotes in the 10Qs. Best, Huey