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Strategies & Market Trends : Good Investment Theses: VALUATIONS w/ FUNDAMENTAL ANALYSIS -- Ignore unavailable to you. Want to Upgrade?

To: Edwarda who wrote (41)4/24/1999 2:42:00 PM
From: Chuzzlewit  Read Replies (1) | Respond to of 160
 
Good point Edwarda. That's one of the main reasons for given for options. But what's wrong with simply starting with sufficient cash to get you over the hump? You could either take it down as part of the IPO, or borrow later on. I think the costs to share holders would be considerably less.

Clearly, even if I were to concede you the point (which I won't yet), you would not argue that this approach makes sense for companies like MSFT or IBM in their current form, would you?

TTFN,
CTC



To: Edwarda who wrote (41)4/24/1999 3:11:00 PM
From: Chuzzlewit  Read Replies (1) | Respond to of 160
 
Can we agree on one point? That the accounting for employee stock options is poor. They are not currently included on the income statement as an expense item, and the dilution to shareholders can be huge, and goes unnoticed. Only repriced options appear, and then in footnotes.

It seems to me that companies use this accounting loophole to artificially bolster earnings.

TTFN,
CTC


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