Saturday, November 30, 2002

PortlandTribune -- New rules might help stock market -- Bill Parish

Investment portfolios and the economy itself are now being consumed by a lack-of-confidence wildfire.

Surprisingly, most of these investment losses are concentrated in fewer than 10 companies, the biggest being Microsoft Corp. At its peak, Microsoft had a total market value of roughly $700 billion. Today, that value is $240 billion, representing a decline of roughly $460 billion.

MICROSOFT FINANCIAL PYRAMID Unfortunately has not been updated in two years.

The fundamental problem is that Microsoft is incurring massive losses and only by accounting illusions are they able to show a profit. Specifically, Microsoft is granting excessive amounts of stock options that are allowing the company to understate its costs. You might ask yourself, what would happen to Microsoft's stock price if the public suddenly realized that they lost $10 billion in 1999 rather than earning the reported $7.8 billion?

Bill Parish is a well respected financial advisor who appears infrequently on network television financial shows. In early 2000 he took his clients out of technology stocks and funds, in early 2001 he sold all stocks and stock funds. He expects to remain out of stocks until the integrity of financial reports improves. I am undecided if the exercise of stock options should be charged as an employee salary expense. The granting of stock options should be.

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