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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 (3674)	11/22/1998 2:28:00 AM
From: Chuzzlewit	Respond to of 4509

Brian, you are correct, but there is a third point to be made. Once the option is exercised the stock is sold immediately and the long-term benefits evaporate. So the benefits of commonality of interest exist only so long as the option has not yet been exercised. This could just as easily be accomplished with profit sharing which vests over a period of time. The difference of course is that cash payments are treated as an employee expense and are accounted for as such on the income statement. Stock options are treated as a financing activity and are therefore ignored as an expense item. TTFN, CTC

To: Marq Spencer who wrote (3674)	11/22/1998 10:07:00 AM
From: semi2000	Respond to of 4509

re: option realignment, Brian and all, I feel option readjustment for employee benefit it good thing. Basically the top brass failed to deliver on promise, fire them, but don't lose the actual talent - which is employees. In which case repricing options will give added incentive to keep the employees remotivated. To employees it may not be clear what the implications are when management promises things that cannot be delivered or some unforseen problems crops up. Then how else you tell people "we promised the marathon ends in another 3 miles, oops, make it another 23 miles". People may just quit and make things worst. What I would like to see is top brass taking pay cut. Now how would one suggest that? my 02 cents semi2000

To: Marq Spencer who wrote (3674)	11/22/1998 2:44:00 PM
From: RetiredNow	Read Replies (1) \| Respond to of 4509

Not true. The alignment is gone only when, the options are not repriced. In the case of PSFT, the employees have been performing very well. The problem is that market dynamics have changed. So now you as an employee are holding worthless options and are no longer incented to do well. But when they are repriced, you are once again excited about the long term. I also don't agree with yours and Chuzz's assertion that the cost of compensation is hidden. It is not completely hidden. Obscured, perhaps. But it still shows up as dilutionof EPS. EPS and estimated PEs are what analysts use to come up with price targets. So as long as EPS gets diluted, price estimates are affected. So it is not hidden. It is fully factored into forecasts. Also, Chuzz said that option don't affect EPS and that's why companies like to use them. NOT TRUE! Outstanding options are fully accounted for as a dilutive effect on weighted shares which are used in the calculation of EPS. More options = lower EPS. IT IS accounted for. I think that you guys are too mired in the thinking that everything has to be either a revenue or an expense, otherwise it doesn't count. There are many ways to let investors know what is going on. True you need to be a little more sophisticated because it's not so black and white, but obviously you guys aren't fooled. So what's the problem? Another thing: Would you prefer that all PSFT's good employees fly the coup and PSFT stock languishes as the company goes under due to the loss of its employees? PSFT has no choice but to compete in order to keep its employees. Everyone needs to just accept the fact that options are here to stay. Never before have lowly employees been able to participate in the wealth a company generates. With the advent of options, this has become possible. You only need to look at all the millionaires created by companies like MSFT, PSFT, CSCO, INTC and others to know this is true.