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

To: Lizzie Tudor who wrote (62971)	2/6/2003 4:00:59 PM
From: GVTucker	Read Replies (1) \| Respond to of 77400

Lizzie, RE: The real issue that options solved was to keep the brilliant engineers in the business functioning as brilliant engineers. Without options, these guys would be forced to move to management where their talents are muted. Options levelled the management structure in silicon valley, and because of that, we had an explosion of inventions and ideas. But you miss the point. There is absolutely zero evidence that if options are expensed, then companies will stop issuing them. If you look at companies that issue options before expensing them and then after expensing them, there is no difference. And that is because there is no reason for the company to stop issuing them. Adjusting a line item on GAAP income statements doesn't change the operations of the company at all. The execs like Chambers who complain about the problems that expensing options will cause truly do not understand financial markets. Their logic is very similar to other execs who claimed that "massaging" earnings was good for the market. Hey, guess what, it wasn't. And now we all see that. Massaging earnings wasn't good for the market because it deceived investors. Just about everyone who owns Cisco or who wants to own Cisco knows good and well that they issue options like water. It would be no great revelation to the market if those options were expensed. It would be a nonevent.

To: Lizzie Tudor who wrote (62971)	2/6/2003 7:21:02 PM
From: RetiredNow	Respond to of 77400

Hi Lizzie, the main rebuttal I have is that if the small companies executives and owners think that stock options are so compelling an incentive, then why do you think they won't be willing to give them out even if they have to record them on the income statement? Afterall, they are probably running red ink anyway. It's the large companies like Cisco who don't have much to gain from stock options issuance anymore who will probably start to shy away from them, if they have to record them on the income statement.. JMHO.