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

To: RetiredNow who wrote (63021)	2/7/2003 11:13:42 PM
From: Stock Farmer	Read Replies (1) \| Respond to of 77400

Yes, exactly. This is an issue for owners. Not employees or management or insiders. Clearly employees want owners to care nothing about stock options so they can be handed out like candy. Clearly managers want owners to care nothing about stock options so that they don't have to be any good at motivating employees, they can just promise riches instead. Clearly insiders want owners (or prospective owners) to be clueless as to what they are buying from the insiders, so that they pay the highest price possible. Any owner who puts too much stock in insiders, management or employees... well, might as well put on a T-shirt saying "please, rob me blind" and parade up and down Wall Street. Regards, John

To: RetiredNow who wrote (63021)	2/8/2003 6:05:09 AM
From: rkral	Respond to of 77400

OT ... Hey mindmeld, re "I think you missed my point." Missed your point? Don't think so, but maybe. So here is my reasoning. Hopefully, my points will be restated sufficiently enough to make a difference. Quoting again, you wrote "If [edit: true owners] ignored expenses such as stock options expense, they get a nice big shock when they tried to sell their ownership shares and didn't get as much back as they thought they were worth." Seems pretty clear, even after the 4th or 5th read. Very little that's ambiguous there. You didn't say "if owners ignored dilution, ... ". And I wouldn't expect you to. We're both willing to credit owners with some intelligence, aren't we? By keeping track of the cumulative dilution of options, an owner knows exactly the percentage of the business he/she owns. This is true even if the owner never knows whether or not options are being expensed. Do you disagree? I proceeded to point out how expensing options does not reduce stockholders' equity, the book value of the business. Indeed, I reminded you that options are non-cash compensation, i.e., expensing options does not even reduce the cash flow of the business. You chose not to counter either point, so I assume you agree with them. Is that assumption incorrect? Indeed, it doesn't really matter if the owner knows whether, or not, expensing options reduces the book value of the business, because there is no difference. IOW, the book value of the business changes $0.00 when an owner tells his/her accountant "options will be expensed". So re options, my conclusion is that an owner who keeps track of cumulative dilution, has sufficient information to accurately determine ownership. So why did you write "If they ignore [..] option expenses, they will get a nice big shock ..."? And I again ask .. What's the big deal anyway? Where's the harm in not expensing option grants .. really? I've re-read both your posts several times. IMO both posts say exactly the same thing re expensing options. How does repeating further understanding of your point? JMO, Ron P.S. My questions are not rhetorical.