House debates stock option bill

Expensing options could make your income negative: If companies start expensing options that could make their income look negative, when they're really making money. This is wrong.

The other thing is that everything is based upon estimates. Think about that. Estimated earnings. Is that what you want when trying to decipher earning reports? And then, what happens when those estimates are wrong. Do they make adjustments in later years? Yup. Decipher that!

Ooh. A very good letter to the editors of thestreet:
http://www.thestreet.com/talk/emailtotheeditors/10117874.html

It talks about just such a (hypothetical) example - a company assumed the stock would rise, expensing it as such, and now, its a bad economy, the stock price is falling, they're losing money. Guess what happens - the earnings get propped up because of the need to restate past option expensing "results". Does expensing options make the income clearer? I *really* don't think so.

The one caveat, is that this would likely wind up in a category that is ignored, as in EBITDA, and so ignored. Is that helpful?

I think the only important thing about it is how many options are going out, so what will be the dilution of my shares?

The original article:
http://www.thestreet.com/_excite/stocks/troywolverton/10168042.html; Posted by: Dan__ Posted on: 07/27/04 You are currently: a Guest | Members login | Terms of Use

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Money doesn't grow on trees Nigel Johnstone | 07/20/04

I'm guessing... rapson | 07/20/04

Quite the opposite I think Nigel Johnstone | 07/20/04

... But Options Do Dan__ | 07/20/04

The 10k is for the investors Nigel Johnstone | 07/20/04

I have to agree... el1jones | 07/20/04

Expenses affect Income nomorems | 07/20/04

Expense or not Domb2 | 07/21/04

Again nomorems | 07/20/04

Message has been deleted. linuxcad_is_crap | 07/20/04

Message has been deleted. linuxcad_is_crap | 07/21/04

Only in Washington... NobodyHome | 07/22/04

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