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

To: Lizzie Tudor who wrote (64757)	9/19/2003 1:05:34 PM
From: GVTucker	Read Replies (1) \| Respond to of 77400

Lizzie, RE: I know, and I'm sure you know, that if you expense options for IPOs, Google will look a lot like Pets.com. I know if I were John Doerr, and I wanted to block options expensing, I would take the Google financials to congress and lay it right out there. Probably the Cisco numbers from 92 might work too. Notice nothing is happening wrt options, there has been a delay, perhaps a stalemate? What do you think the issue is? I'll bet it is this. You vastly overestimate this issue. First of all, even if options are expensed, Google will look nothing like Pets.com. Google has positive cash flow. I doubt Pets.com ever did. Secondly, you make it sound like the market would never take an unprofitable company public. Go back to the beginning of the biotech era, about a couple of decades ago. Companies like Genentech, Cetus, et. al. weren't profitable then, no matter what the policy on expensing options. And yet they were able to have an IPO just fine. Why? Because the market could perceive that they might just make a ton of money in the future. The market was right with Genetech. The market was wrong with Cetus. But both of them had a shot in the public markets. And no matter what the policy on expensing options, companies like Google wouldn't have a problem with their IPOs, either. That doesn't mean that a company like drkoop.com could still go public. Far from it. But that is because the market doesn't make the same idiotic mistake twice, at least as long as there are a lot of participants with a memory of the mistake. But that has nothing to do with the options issue. I really think that if you could just sit in an investment banking session with a company like Google you would change your opinion on this issue. Because the valuation of the company depends much less on the income statement than you could ever imagine.