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

To: Lizzie Tudor who wrote (63624)	4/19/2003 3:48:57 PM
From: GVTucker	Respond to of 77400

Lizzie, RE: More nuttyness when we try to igore the employee's continued employment as a requirement for employee stock options to have any worth... Black Scholes ignores the relationship. You don't have to use the original, 3 decade old Black Scholes model. That original model didn't account for things like American options, dividends, and, yes, illiquidity. Many variations of the first model exist that account for those things. "Black Scholes" has become a generic term for all of those models that are Black-Scholes based, even though they were developed by others in most cases.

To: Lizzie Tudor who wrote (63624)	4/19/2003 6:51:47 PM
From: Stock Farmer	Respond to of 77400

There has to be a better way, I suggest expensing the actual value* of options at exercise... nobody can really argue with that...* You would be surprised. Had a chat with rkral lately? LOL I've been on this board constantly using the actual costs of stock options at exercise as the metric by which I evaluate the past performance of companies. Using this metric, for example, Cisco has never been profitable. Try figuring it out for Siebel or Oracle. If you think Silicon Valley is up in arms about hypothetical costs, they would probably scream blue murder if they had to restate earnings based on actual costs! Now that would be a picture to see! As far as Black-Scholes (et. al.), these are merely models which attempt to project what the future actual cost is most likely to be and then discount it back to present. I see no problem myself in asking Boards of Directors to (a) report on the actual costs, and (b) estimate the future costs at the time of grant, and (c) justify their decision to incur this estimated future costs in light of alternatives (e.g. salary) and current business results (e.g. revenue, earnings). That way we shareholders would be able to determine which firms are more or less productive (capital efficient) than others and invest accordingly. Now, if they can do all that without reference to Black Scholes, all power to 'em. John

To: Lizzie Tudor who wrote (63624)	4/20/2003 11:32:23 AM
From: hueyone	Read Replies (1) \| Respond to of 77400

Your #reply-18860260 There has to be a better way, I suggest expensing the actual value* of options at exercise... nobody can really argue with that...* Your reply four hours later after you JS points out that expensing so called actual expenses will portray Cisco in a decidedly unfavorable light: #reply-18860790 The fact that Cisco has never been profitable in its entire existence when options are expensed pretty much makes the case against expensing options right there. What's up with this Lizzie? Seems like a rather quick change of heart! Regards, Huey