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  • From: Michael S Czeiszperger <czei AT webperformanceinc.com>
  • To: "InterNetWorkers" <internetworkers AT franklin.metalab.unc.edu>
  • Subject: Option Costs Come Out of Hiding
  • Date: Mon, 20 May 2002 09:40:33 -0400


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Yet another article about the effect of options on tech. companies earnings.
Based on the calculations in the article, MS's P/E ratio would move from 47
to around 60, as their earnings drop by 1/3.

http://www.nytimes.com/2002/05/19/business/yourmoney/19WATC.html

"...Standard & Poor's announced that it would begin deducting the expense of
stock options from its calculations of companies' core earnings. Such a move
by S.& P., one of the nation's largest purveyors of financial information,
means that investors will be able to grasp option costs even if companies
keep burying them in the footnotes."

"At Microsoft, option expense came in at $3.3 billion last year, almost
one-third of the company's reported net income. Option expense was $2.6
billion at Cisco Systems and $2.5 billion at Nortel Networks. Cisco and
Nortel reported losses for the year, without deducting the cost of their
options from their results. "

- --
Michael Czeiszperger
Web Performance Inc.
Raleigh, NC
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  • Option Costs Come Out of Hiding, Michael S Czeiszperger, 05/20/2002

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