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Technology Stocks : America On-Line (AOL) -- Ignore unavailable to you. Want to Upgrade?

To: RocketMan who wrote (1850)	1/7/1999 12:10:00 PM
From: Chuzzlewit	Read Replies (2) \| Respond to of 41369

Rocketman, I have studied the issue of stock options to death, and have come to the conclusion that they are simply a way of robbing the unwary investor blind. Every time there is a proposal to account for the cost of employee stock options on the income statement, high-tech companies get themselves in a dither! Many of these companies are rolling in cash, so it isn't an issue of preserving cash for a struggling young company. It's a mechanism whereby companies can inflate their apparent earnings and avoid detection. In addition, it is the gift that keeps on giving, because it leads to continual dilution of ownership. The major culprit in all of this is a perversion of a legitimate desire on the part of shareholders to make management accountable to the bottom line. But the top managers (and these are the guys that get the vast bulk of the options, not the grunt programmer) see that as a way to extort additional money from their shareholders. What they did was to add on an extra layer of compensation, and then claim that if they don't get it they will lose their top talent. Nonsense! One of the first things that Warren Buffett does when he buys a company is to get rid of this evil gimmick. I say Bravo! But even if you don't get rid of it, why not account for it? The answer is that if stockholders saw what this scheme was costing them they would be up in arms. In AOL's case, there were 505MM shares o/s at the end of Sept, 1997. At the end of 1998 that had swelled to 550MM. Does that tell you something? TTFN, CTC