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

To: RetiredNow who wrote (67207)	3/5/2005 6:16:31 PM
From: Lizzie Tudor	Read Replies (3) \| Respond to of 77400

I'm curious if you guys think options expensing will cause any of these tech stocks to fall? I don't think there will be any effect on stock prices. My feeling is that options expenses will turn out to be another letter in the EBITDA acronym or something like that. I own google and there are some options expenses reported and they are ignored by the investment community along with other things like "one time" non-cash payouts to yahoo (the fact that goog stock went up 50 pts after earnings a quarter ago - even though earnings when you included all these charges were only .18 absolutely confounded the shorts). Of course options expensing will cause options to be curtailed, because more eyes are watching and thats what you really want. So that is good. But as for whatever earnings are reported to be WITH options- I don't think that number will be the "watched" number that analysts try to mark.

To: RetiredNow who wrote (67207)	3/6/2005 12:06:52 AM
From: rkral	Read Replies (1) \| Respond to of 77400

mindmeld, re "[ed: Expensing options reduces] net income, which means that Cisco will pay less taxes. That means high cashflow. Higher cashflow means a higher valuation." Cisco grants options with an exercise price equal to the market price causing the intrinsic value to be $0. In that case, expensing the options changes neither actual taxes paid nor cash flow. Paragraph 58 of SFAS No. 123R, "Share-Based Payment", reads ... "Income tax regulations specify allowable tax deductions for instruments issued under share-based payment arrangements in determining an entity’s income tax liability. For example, under U.S. tax law at the issuance date of this Statement, allowable tax deductions are generally measured as the intrinsic value of an instrument on a specified date. The time value component, if any, of the fair value of an instrument generally is not tax deductible. Therefore, tax deductions generally will arise in different amounts and in different periods from compensation cost recognized in financial statements." fasb.org Ron