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

To: Jorj X Mckie who wrote (66110)	8/31/2004 7:34:59 AM
From: rkral	Respond to of 77400

Jorj, re "Ironically, what you see as a negative appearance is actually very positive for the stock overall. If JC exercises options to sell 2 million shares, that removes 2 million shares of overhang. " So you're suggesting potential dilution depresses stock prices more than actual dilution? If so, a tough sell ... with no buyer here. re "If the executives all wait until their options are about to expire (I think CSCO's options expire 10 years after the grant date). What you will have is a concentration of selling by executives ... " Nice hypothetical, but that's not what usually happens. For FY03 option grants, Cisco estimated a 5.8 year average option life. It is reasonable to assume that estimate is volume-weighted ... and, more relevantly, based on experience. re "I see the options overhang issue to be a serious one for CSCO's stock. " People that talk about "option overhang" are usually interested in the 'shock value' of the biggest number ... but it paints an incomplete picture. One needs to also look at annual potential dilution (grants) ... and the per annum actual dilution (exercises) ... and their magnitude relative to the overhang ... and their trends. But if one is looking for a single number, a useful one is the 5-year average of exercise dilution -- options exercised during the year, divided by shares outstanding at the start of the year. That is an actual smoothed dilution. For CSCO, exercise dilution (5-yr ave) is presently 1.7% ... but it was 2.7% at the end of FY00. Ron

To: Jorj X Mckie who wrote (66110)	9/1/2004 4:50:00 AM
From: Amy J	Read Replies (1) \| Respond to of 77400

"D.A. mulls criminal inquiry into S.J.-Cisco deal" By Aaron C. Davis Mercury News If there's culpability or responsibility on someone's part, we should know.'' mercurynews.com ================================================ According to one manufacturer, SJ City Govt was the only government bid in their company's entire history where a decision was made "well in advance" of the vendor's visit. In fact, it was the only government entity in the entire United States this company approached, that didn't conduct an evaluation because it had pre-selected. It's obvious what this says about San Jose City's government officials running this, when compared to other well-respected American government institutions whose procedures include customary evaluations, not pre-selection. The significance of the above is the following: * The city govt officials pre-selected a vendor, before conducting evaluation testing of many other vendor products. * The city govt officials operating this, had atypical procedures, when compared to virtually any other major government institution in the US. Conclusion: San Jose City Govt officials short-circuited what is customary and normal procedures performed by other government entities in this country. How is that Cisco's fault? Though, I believe Cisco could study what Microsoft does in its govt sales process, to ensure govt entities have performed industry evaluations before selecting. SJ City Govt should have known to do this, but Cisco could also ensure govt entities are competitively conducting evaluations. It's better to win on the basis of good product, good pricing, and good interoperability. Never on the basis of enabling a govt entity to conduct blind pre-selection. As a CSCO shareholder, I'd prefer to see Cisco win on the basis of a product face-off in interoperability, which is absolutely Cisco's extremely strong card - worth millions of cost savings on a bid. But not on the basis of blind pre-selection. Namely because that's what capitalism is about - winning competitively. Contrary to what Mercury News suggested and probably the only point I would gently disagree with them on, is it's appropriate to help write a spec for the govt, because this is cost effective for the govt. Anyone that has worked in emerging technologies has to write specs for govt officials, simply because when technology is so new to the industry, it's nearly impossible or is a huge struggle for govt officials to even understand all of it let alone spec it out all by themselves, so it's appropriate for corporations to provide this assistance, I believe. Otherwise, taxpayers will pay millions of dollars in consulting fees. But the one procedural thing that should be changed by the SJ City govt, is to ensure the govt conducts evaluations rather than pre-selecting, in order to ensure a competitively fair selection process. That's typical of what other US govt entities do. On another note, the lawsuit that SBC filed against SJ City govt is an offensive waste of taxpayers money. Companies shouldn't use the legal system as their sales channel tactics by filing expensive lawsuits against govts that taxpayers pay. Especially those that aren't squeaky clean. There's nothing more annoying than hypocrisy. It wouldn't take much for someone in the communications industry to supply SJ City officials with documentation directly from SBC that shows SBC has not conducted itself according to the rules Congress established. There's nothing more annoying than hypocrisy. Regards, Amy J