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

To: Lizzie Tudor who wrote (63381)	3/17/2003 6:53:21 PM
From: rkral	Read Replies (1) \| Respond to of 77400

OT ... Lizzie, re "I am wondering how startups can IPO with options expensing as it is currently being proposed. Assuming a startup has to show profitability for 2 quarters (the old rule) I mean." I assume by profitability you mean a net income greater than zero. Options would be expensed before vesting. The expensing would reduce net income. If positive net income is and remains the only measure of suitability for an IPO, the IPO would be delayed until net income becomes positive. But I don't think that extreme will happen. The financial condition of the startup is not changed one red cent when it begins expensing options. Only net income and financial metrics based on net income are changed. Other measures such as (1) assets, (2)total cash flow provided by operating, financing, and investing activities, and (3) stockholders' equity remain changed. Financial people could expand the list, I'm sure. So my guess is that underwriters will be able to change the "rule" and sell the IPO at nearly the same development stage of the startup. Well, the IPO may be delayed a little, but that's not all bad IMHO. Regards, Ron

To: Lizzie Tudor who wrote (63381)	3/18/2003 10:44:58 AM
From: Stock Farmer	Read Replies (1) \| Respond to of 77400

Wow... go out mountaineering with a bunch of scouts for a long weekend and come back to a veritable deluge of posts. I thought for a moment CSCO had either plummeted to where it belongs or rocketed up 10 bucks. Oh well, same-old same-old. Ref your specific question "I am wondering how startups can IPO with options expensing as it is currently being proposed. Assuming a startup has to show profitability for 2 quarters (the old rule) I mean. I've never seen this addressed-" Well... considering that we've seen companies with no REVENUE get to IPO, the investment banking community isn't going to let an old rule of thumb stand in the way of exit via IPO. Nope. What you will see is a transition as the company matures and weans itself off of the nipple and onto solid food. Suggesting that it's silly for adults to wear diapers doesn't mean it's silly for babies too. Whether a 3-year old wears diapers or underwear is viewed by most child-care authorities as irrelevant. Infants wearing underwear and teenagers in diapers... either one would raise eyebrows. It's no different with options. We get to expect that babies grow up and behave like adults some times. John