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 : Oracle Corporation (ORCL) -- Ignore unavailable to you. Want to Upgrade?

To: hueyone who wrote (17786)	1/10/2003 9:08:15 AM
From: MeDroogies	Read Replies (1) \| Respond to of 19079

I agree with you about the lack of transparency regarding options, in general. While ORCL may not be on that list, I'm not sure it says anything about how forthright they have been about their disclosures. Many analysts, investors, and accountants think ORCL is one of the more transparent companies in terms of determining value. Primarily, this is due to issues they ran into several years ago and addressed quickly and resolutely. I won't deny there is still a long way to go with regard to improved accounting of options. But to lump ORCL in with firms that engage in more aggressive accounting tactics would be unfair.

To: hueyone who wrote (17786)	1/10/2003 10:58:41 AM
From: Hardly B. Solipsist	Read Replies (1) \| Respond to of 19079

Telling the tax man one thing and shareholders another is a consequence of the tax code, not some plot on the part of boards to defraud people. The current tax code encourages the use of stock options, and this was (according to what I've read on the subject) the one of the intents of legislators involved. Perhaps there was some secret meeting in a swamp where they were handed big sacks of money for this, but it's also possible that they felt that it would be best for the economy. What members of the Oracle board have proposed doing is to have the quarterly statements contain separate accounts of the probable costs of outstanding options valued by various means. As one of them pointed out at the company meeting last October, using Black-Scholes would have resulted in a very large expense for the options they granted at the height of the stock price (those 20M shares that Ellison got), and now those same options would be in the earnings column, which is clearly absurd (and which makes the original expensing of them via that method absurd). The fact is that if ORCL stock gets over 40 again before Ellison's options expire (which might be a result of his eventual retirement instead of the legal limit on the options), the I doubt that most shareholders will mind his making another big pile of cash. If I had held Oracle stock since 1991, I would have been even less likely to begrudge him his recent payday (and I still didn't). But just because I don't think that ORCL has abused stock options doesn't mean that I think that there aren't many companies (perhaps it's even a majority) that do. The main problem with eliminating options for tech companies is that this would mean that the only way to make any money would be to get there pre-IPO, and that would hurt the growth of the winners. And simple-minded expensing of options works less well for tech companies because the stock is more volatile. And finally, companies that are inclined to cheat would just use deferred compensation plans (which they already do) or something even more opaque, to overpay the senior executives (the only people that get options in these companies).