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Technology Stocks : PSFT - Fiscal 1998 - Discussion for the next year -- Ignore unavailable to you. Want to Upgrade?

To: Marq Spencer who wrote (2179)	9/8/1998 8:20:00 PM
From: Chuzzlewit	Read Replies (1) \| Respond to of 4509

Brian, at first blush I conceptually like the approach of using the cost of offsetting call options as a surrogate for the cost. As you correctly point out, it allows for a proper matching matching of funds. I am not so sure that I like the idea of an interest free loan as a surrogate because it doesn't capture the appreciation potential inherent in an option. Remember also that the cash generated by the company by the sale of additional stock is not recognized as revenue. How would you handle the case of repriced options? The major problem we face as shareholders entails more than the simple cost -- it is also the continuous dilution that these grants imply. Additionally, the use of options violates the matching principal so dearly loved by accountants. The use of stock options precludes the recognition of the true costs of wages and salaries in the period in which those labor hours were expended. As a result, it is very difficult to adequately measure gross profits, G&A and R&D costs. Thanks for your thoughtful comments. TTFN, CTC