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

To: RetiredNow who wrote (63558)	4/14/2003 11:36:53 PM
From: Stock Farmer	Read Replies (1) \| Respond to of 77400

Absotively posolutely! A major problem is that we have very few investors who are not also wage earners. Thus, they are personally negatively effected by anything that would decrease their stock option income, even though they might be substantially positively affected by something that would increase their capital gains. And perversely, what happens with options, is that the optics are such that their capital gains appear to go up just like their wage appears to go up... But it's a pyramid scheme of the most monstrous proportions being perpetrated by the older boomers on all those who come afterwards. And there will be heck to pay. Only the folks who get out while the getting is good (possibly I got the tense wrong here, it may already be too late)... well there will be no getting back at them. Good luck going after John Chambers and saying "Good job with that $1 salary...now, can I get back some of those millions in stock options you cashed back then too"? Although if there was one CEO who has the kind of integrity that would take, Chambers might be the guy. Now we get to suffer the consequences. Which mainly are that despite how well a company like Cisco is run, its stock is still PRICED ahead of the business, and at a PREMIUM to what it is likely to earn SHAREHOLDERS in the forseeable future. The only way an overpriced stock represents a profit to the owner is if the owner can sell it when it gets even more overpriced. Which ends up with folks hanging on to over-priced equities until they become reasonably priced. Which is almost precisely the exact opposite of a "get rich quick" scheme and a good way to get poor slow. The number of individuals willing to buy "good companies" simply because the company is good and without reference to price... well, they are an endangered species. So the likelihood of being able to foist an over-over-priced equity on someone else is greatly diminished these days. So when holding an over-priced equity... odds aren't good. Unfortunately, it takes quite a bit of education (or a heck of a lot of self study) to make a reasonable determination of price relative to value... like you said. I guess that's why the "investor class" isn't destined to become "upper class" any time soon. John

To: RetiredNow who wrote (63558)	4/15/2003 6:59:58 AM
From: rkral	Read Replies (1) \| Respond to of 77400

OT ... mindmeld, re "I think it really does take someone with a CPA or a heavy finance background (or a heck of a lot of self-study) to get why not expensing stock options is bad ... " You are underestimating the intelligence of a many many people, IMHO. And since you are an ex-CPA, it sounds like an arrogant statement. re "That's why this debate rages forevermore within the investor class." Investors are not alone in this debate. Educators, legislators, corporate executives, and even accountants have divided opinions on the stock options issue. Regards, Ron

To: RetiredNow who wrote (63558)	4/15/2003 1:19:32 PM
From: Lizzie Tudor	Read Replies (1) \| Respond to of 77400

I suspect that the majority ownership of cisco shares is institutions and not individuals though. And those institutions have CPAs at their disposal to dissect earnings reports, so you should expect changes to the options policies within cisco if due diligence supports it. I suspect this is not as black and white as is the case presented by investors on SI, however. For example this new grant, is in lieu of pay. And I know that cisco isn't paying much to anybody these days, plus they are making staff double up in hotel rooms and the cost cutting is unbelieveable. Cisco will make its case for options to the institutions and it is entirely possible that they walk away thinking like me, that options are the right way to go in lieu of pay. Or the institutions may think like the investors here, I don't know. It isn't obvious either way though.