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

To: Stock Farmer who wrote (64557)	9/14/2003 11:41:23 PM
From: Stock Farmer	Respond to of 77400

Actually, none of the three are exactly equivalent. But it is obvious that scenarios 1 and 3 are NOT equivalent.

To: Stock Farmer who wrote (64557)	9/15/2003 1:18:32 AM
From: Don Lloyd	Read Replies (1) \| Respond to of 77400

John, Don, your argument embeds a fallacy. Scenario 1: The company that is growing its cash hoard at 10 M$ but giving away 20 M$ in equity. Scenario 2: The company that is diminishing its assets at a rate of 10 M$ per year. Scenario 3: The company that is growing its cash hoard at a rate of 10 M$ per year without dilution. Two of these scenarios are equivalent in terms of the rate at which the company is increasing the wealth of its current shareholders. How about you pick which two and explain. After which we can return to the debate about whether to record the value of non-cash compensation as an expense or not. I'll specify one. The company is compensating its employees with new stock such that each year you would enter a P&L non-cash compensation expense of $20M. When you do this, the bottom line becomes a loss of $10M. Other parameters may vary as necessary. Regards, Don