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To: Uncle Frank who wrote (342)	8/8/2002 10:59:12 AM
From: TimbaBear	Read Replies (1) \| Respond to of 562

Uncle Frank >> One day the company sells shares at a certain price to the optionholder. On that same day he/she can sell them into the market at three times the price. That is a loss to the company. << By the same reasoning, if a company were to write a long term contract to supply a customer with a component at $10, and if the spot market was $15 at the time of a particular shipment, the company should apply a $5 offset to any profit they made on the transaction No Frank, the case of the stock buy is an expenditure of actual cash on the part of the company, whereas your example is the absence of extra profit. Quite a difference. If, in your example, the company had to purchase the component at $15 and supply it to the client at $10 to meet the terms of the contract, then the company would record a loss on the transaction, not say there was no effect. The accounting regulations should be changed to require that no dilution occur due to stock options and that any purchases made to prevent that dilution be counted as an expense. Then the investor would be truly informed as to the true cost of the option program. The current arguments have their eye on the wrong ball. It's not the option "issuance" that should be expensed but, rather, the cost to the company when the options are "exercised". TimbaBear

To: Uncle Frank who wrote (342)	8/8/2002 2:27:19 PM
From: Lizzie Tudor	Read Replies (2) \| Respond to of 562

Probably true; engineers are in a weak position at the moment. Perhaps companies convert all their engineers to contract worker status. Then shareholders wouldn't have the unnecessary drain of health insurance and vacation benefits against earnings. This is what cisco does for a lot of IT infrastructure. The problem is, then Cisco must pay what the skillset is actually worth- gasp! How much does it cost for Cisco to hire a bunch of people who can customize their order cycle to be more like Dell's. One option is they can get consultants to do this from Oracle- thats about $150/hr. Or they can hire independents to do it (slightly less). To hire employees to do it, it would knock their IT salary guidelines all out of whack, since IT is mostly support personnel not order cycle architecture people. I wonder if this reliance on contracting personnel is skewing cisco's revenue/employee to the upside? their other costs seem inline though, capex and all that. L