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  • From: Michael Czeiszperger <czei AT webperformanceinc.com>
  • To: InterNetWorkers <internetworkers AT franklin.metalab.unc.edu>
  • Subject: Re: Effect of stock option tax reporting on MS
  • Date: Wed, 13 Mar 2002 14:55:18 -0500


Tanner Lovelace wrote:
Basically, the company is allowed to deduct from their earnings
however much an employee earned when cashing out stock options.
This can be huge at times. For example:

"In fiscal 2001, NVIDIA generated about $68 million in cash from
operations, with $63.2 million coming from the option-related tax
benefit. In other words, if NVIDIA's stock hadn't been on fire and
employees hadn't exercised boatloads of options, the company would
have generated very little cash that year."


And the best part is, when the employee exercises the option, the money they pay goes right back to the company. Its better than printing money!

The interviews I've heard from people who are not in favor of the stock option accounting rule change were interesting. The arguments I heard were:

1. There's already enough disclosure in the annual reports, so that even if the "real" profits aren't reported, professional analysts can figure it out.

2. Non professionals shouldn't be doing their own stock analysis anyway.


--
Michael Czeiszperger
czei AT webperformanceinc.com





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