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

To: Stock Farmer who wrote (62791)	1/28/2003 4:09:27 PM
From: bofp	Read Replies (2) \| Respond to of 77400

John, The "value" of a share of stock is NOT its claim on existing assets, rather that claim plus its claim on future cash flows. In your example, I, as the owner of the original 100 shares, have allowed my claim on future cash flows to be cut in half in exchange for a claim on $27.50 in cash today. You have bought the rights to half the future cash flows and the $27.50 in cash assets for $100. Mindmeld, has sold his claim on current assets and future cashflows for $45. It is only over time, as we understand the generation of cash from the business that we will understand whether or not these transactions were value creating and to whom. The stock price movement SHOULD reflect the generation of future cash value, but probably won't in any short term analysis. BTW what if mindmeld had written software worth $145 in exchange for those options? BofP