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To: Tom D who wrote (61177)	8/29/2002 10:51:07 PM
From: Lizzie Tudor	Read Replies (2) \| Respond to of 77400

P.S. You may think that Huey is barking incessantly on a tired issue, but I think his arguments are cogent and well-documented. You can skip his posts if you like. I don't think the disrespect you showed his argument is warranted. Whatever Tom. He's on every thread I follow. Every one. About once a week. There is a thread set up for discussion of this issue.... his, I believe...LOL. And obviously I don't agree with your assertion... Everybody really knows that options should be expensed, but so many influential people would be impacted in negative ways by another major decline in the stock market that they are all trying to rationalize an indefensible argument. I believe options are accounted for currently in a clean, undisputable manner, and that is the fully diluted EPS. I don't like forecasting in a financial statement. It doesn't belong there if you ask me, for the same reason CEOs are hesitant to make forecasts of future results. I know the technology bears were salivating thinking this options issue would be a slam dunk for easy profits on their puts, and it is about as transparent as the executives at CA saying the BOD is looking out for their shareholders. At any rate Chambers has stated his position along with Barrett and Gates and most other high tech CEOs. So there you have it. Lizzie

To: Tom D who wrote (61177)	8/30/2002 8:57:44 AM
From: GVTucker	Respond to of 77400

Tom, RE: Its a tired old issue that could knock up to 40% off the value of the NASDAQ MSFT would have had profits of $950M instead of $1.6B in the last quarter if they had expensed their options. What would happen to the valuation of that company if their earnings suddenly declined 40%? What would happen to the overall NASDAQ composite if some of the largest capitalized companies expensed their options? Would we have two sets of expectations for PE ratios--one for companies who expense options and one for companies who don't? Probably not. Some companies would have major declines in valuations. Microsoft, along with just about every other public company, has fully disclosed the options expense and the earnings declines that would be associated with that expense. In addition, the change in calculation of earnings wouldn't change Microsoft's cash flow by one penny. Sorry, I just don't believe that the market is that inefficient. Perfect example--in the past year, GAAP changed the way that acquisitions and intangible assets are expensed due to SFAS 141/142. This resulted in an increase in reported earnings for just about every single company that is impacted by those rules, in particular bank stocks.. Did every bank stock rocket up with the higher earnings? No. Instead, PE ratios were adjusted downward. Most analysts report earnings on "Old GAAP" and "New GAAP" for companies that have adopted SFAS 141/142 and have seen a significant change in earnings due to these accounting adjustments. Just like stock options, these adjustments didn't affect cash flow. And they didn't affect the stock price. Do I think that options should be expensed? Sure. But it isn't as if stock option expense is some deep dark secret that only learned bears know. It's in the market already.