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

To: GraceZ who wrote (61002)	8/9/2002 7:26:38 PM
From: Lizzie Tudor	Read Replies (1) \| Respond to of 77397

come to the conclusion that I'll be backing them back out when I look at the company's financials Thats exactly what Chambers said in the call... that the tendency would be to "proforma them out". I know thats what I'm going to have to do for those companies that choose to expense these things. My only concern is that the earnings are fully diluted. Lizzie

To: GraceZ who wrote (61002)	8/9/2002 10:35:17 PM
From: hueyone	Respond to of 77397

I come to the conclusion that I'll be backing them back out when I look at the company's financials, the same way I back out every other BS non-cash "expense". Fine. It would be dangerous for the US economy if everyone saw the light simultaneously. Best, Huey

To: GraceZ who wrote (61002)	8/10/2002 2:52:55 PM
From: Mark Adams	Respond to of 77397

On a slightly different tangent; Explain flat PPI with rising CPI and corporate margin squeeze. How is it possible to have these three simultaneously? Answer that and you have the core reason behind inflation. Try #1; Increased debt service burdens would squeeze corporate margins despite higher retail prices and lower primary/intermediate good costs. To elaborate a bit further; I seem to remember that PPI costs (primary and intermediate goods) represent only about 10% of the cost of final products. The bulk of end good costs is labor. I think Tony C of BondTalk is the source of this idea. So a decline in PPI costs has a muted impact on CPI. This is easily offset by increased compensation expense (ie higher health insurance premiums), increased cost of capital (including debt service burdens), and increased taxation. The real question is what does this mean going forward? Corporate bond spreads continue to widen, while some relief on taxation may have been granted. And labor costs? It would appear profits and margins may continue to be squeezed going forward. On the options issue; why do companies claim they need to reprice options to retain employees? It would seem if that is truly the case, then options are a non cash compensation expense. I agree that operating income is important. But compensation expense should be part of the operating expenses. And if options are truly vital to employee retention, then I don't see how anyone can claim options are not part of operating expenses. That options are 'free' under current accounting, and provide tax benefits on the backend, makes it very easy to give lucrative grants to management and key employees. Thus shifting huge amounts of value to the grantee. If options had been expensed during the 90's, perhaps we wouldn't see the income disparity between the executive suite and the floor. Perhaps the pressure to manipulate books or spin the 'scene' wouldn't have been quite as great. BWDIK?