But the issuance of this form of compensation does not represent an expense to the company. Not, not, not.
Option compensation represents a dilution of the value of shareholder equity.
Without hammering to much on your "complete" case (not, not, not), how does this analysis fit with the fact that companies can take a tax deduction on the exercise of options? Deductions are normally related to expenses.
The "Bill Parish" discussion needs to be taken with a few grains of salt; his treatment of options as debt is not a fair assessment; the fact that options are part of equity is quite critical to the analysis, and it seems to me that Parish isn't fair enough in that.
The trouble with derivatives is that they're too damn clever. IANAA, but here's an excerpt from the Economist article Bill Parish mentions on his website. It includes a quote from Warren Buffett, who ought to know what he's talking about:
Some maintain that these numbers exaggerate the problem: there is genuine dispute over how best to calculate and account for the cost of executive options. But this is quibbling. Warren Buffett, a well-known American investor, put the case succinctly for tightening the rules on share-option schemes in the recent annual report of his investment company, Berkshire Hathaway. "Accounting principles offer management a choice: pay employees in one form and count the cost, or pay them in another form and ignore the cost. Small wonder then that the use of options has mushroomed," he observes. "If options aren't a form of compensation, what are they? If compensation isn't an expense, what is it? And, if expenses shouldn't go into the calculation of earnings, where in the world should they go?"
No website distribution model will be faster easier or cheaper than Napster. So why should people switch to downloading music from several websites or officially sanctioned MP3 servers when they can just use Napster to get all the music they need.
Napster allows access to all sorts of music for free. Do not underestimate the power of free stuff. Most of my friends have stopped buying CDs and while I still buy them (I have over 150) I do it more from a guilty conscience (and because I can afford to) than due to any real need. And even then, if I ever find an affordable car MP3 player I doubt that I'll ever buy a CD again. I have seen this same sentiment echoed by journalist for magazines as prestigous as Fortune and Forbes when describing the new threat to the music industry.
Microcharging for individual songs only means that the record companies and artists get even less money. Now instead of 1 person buying a $16.00 CD or $5.00 single and making it available on the Net for Free, the song would have cost $0.50 or $1.00 and would still be available on the Net for free.
Maybe, but on the other hand:
An official distributor could guarantee quality control and versioning
An official distributor could burn a CD for you if you don't have a burner
You wouldn't be breaking the law by having an unlicensed copy
You wouldn't be breaking the artist by having an unpaid copy. People do support their favourite bands. Why else would they buy all those crappy t-shirts at concerts?:-)
The new technology lets almost anyone be a distributor (including the artist), but it doesn't let the distributor make a whole lot of money. Bad news for distributors, but not for anyone else.
You're assuming that anyone who's visually impaired is a "domestic user" and not a "hacker or nerd". I've taught comp. sci. students with pretty serious visual impairments, it's not necessarily a show-stopper.
[I hit submit instead of preview, please moderate the last effort]
Geesh people, Runtime morphing is NOT NEW. The company that Sun bought to do the Hotspot VM did it with Smalltalk YEARS before Transmeta.
Close enough. Sun didn't buy a company as far as I know. The technology comes mostly from the Self group at Sun. This is credited (but maybe not enough!) in the Hotspot whitepaper (try searching for 'Self').
[Begin shameful namedrop]When I was visiting the Self group in '96, they told me how frustrated they were that they knew how to speed up Java and couldn't get the Java guys to pay any attention... it was good to see that they got the message across eventually.[end shameful namedrop]
Dynamic optimisation is totally not new but there's always room for more research.
By the way Self is really worth checking out. How many environments let you change your inheritance at runtime? Or blitz the machine by visually manipulating the interpreter's settings?
Geesh people, Runtime morphing is NOT NEW. The company that Sun bought to do the Hotspot VM did it with Smalltalk YEARS before Transmeta.
Close enough. Sun didn't buy a company as far as I know. The technology comes mostly from the Self group at Sun. This is credited (but maybe not enough!) in the Hotspot whitepaper (try searching for 'Self').
When I was visiting the Self group in '96, they told me how frustrated they were that they knew how to speed up Java and couldn't get the Java guys to pay any attention... it was good to see that they got the message across eventually.[end shameful namedropping]
Dynamic optimisation is totally not new but there's always room for more research.
By the way Self is really worth checking out. How many environments let you change your inheritance at runtime? Or totally blitz the machine by visually manipulating the interpreter's settings?
Slashdot Mirror
Options are, indeed, a form of compensation.
But the issuance of this form of compensation does not represent an expense to the company. Not, not, not.
Option compensation represents a dilution of the value of shareholder equity.
Without hammering to much on your "complete" case (not, not, not), how does this analysis fit with the fact that companies can take a tax deduction on the exercise of options? Deductions are normally related to expenses.
The trouble with derivatives is that they're too damn clever. IANAA, but here's an excerpt from the Economist article Bill Parish mentions on his website. It includes a quote from Warren Buffett, who ought to know what he's talking about:
Some maintain that these numbers exaggerate the problem: there is genuine dispute over how best to calculate and account for the cost of executive options. But this is quibbling. Warren Buffett, a well-known American investor, put the case succinctly for tightening the rules on share-option schemes in the recent annual report of his investment company, Berkshire Hathaway. "Accounting principles offer management a choice: pay employees in one form and count the cost, or pay them in another form and ignore the cost. Small wonder then that the use of options has mushroomed," he observes. "If options aren't a form of compensation, what are they? If compensation isn't an expense, what is it? And, if expenses shouldn't go into the calculation of earnings, where in the world should they go?"
Maybe, but on the other hand:
The new technology lets almost anyone be a distributor (including the artist), but it doesn't let the distributor make a whole lot of money. Bad news for distributors, but not for anyone else.
RyanS
RyanS
Geesh people, Runtime morphing is NOT NEW. The company that Sun bought to do the Hotspot VM did it with Smalltalk YEARS before Transmeta.
Close enough. Sun didn't buy a company as far as I know. The technology comes mostly from the Self group at Sun. This is credited (but maybe not enough!) in the Hotspot whitepaper (try searching for 'Self').
[Begin shameful namedrop]When I was visiting the Self group in '96, they told me how frustrated they were that they knew how to speed up Java and couldn't get the Java guys to pay any attention... it was good to see that they got the message across eventually.[end shameful namedrop]
Dynamic optimisation is totally not new but there's always room for more research.
By the way Self is really worth checking out. How many environments let you change your inheritance at runtime? Or blitz the machine by visually manipulating the interpreter's settings?
RyanS
Close enough. Sun didn't buy a company as far as I know. The technology comes mostly from the Self group at Sun. This is credited (but maybe not enough!) in the Hotspot whitepaper (try searching for 'Self').
When I was visiting the Self group in '96, they told me how frustrated they were that they knew how to speed up Java and couldn't get the Java guys to pay any attention... it was good to see that they got the message across eventually.[end shameful namedropping]
Dynamic optimisation is totally not new but there's always room for more research.
By the way Self is really worth checking out. How many environments let you change your inheritance at runtime? Or totally blitz the machine by visually manipulating the interpreter's settings?
RyanS