Stock Options Expensing Still Not Devastating Tech Companies
from the wait-'til-next-quarter dept
The media, with its fascination over stock options expensing, is playing up the fact that Yahoo's first-quarter earnings took a major hit on options costs, to the tune of $65 million. Of course there were no fundamental changes to Yahoo's profitability as the new regulations are purely an accounting matter. The company's operations haven't changed at all. Furthermore, Wall St. clearly recognizes the earnings drop for what it is, and isn't punishing the company. That being said, the new regulations aren't entirely harmless. Accounting, for a public company, isn't just a matter of adding and subtracting. Ideally, the company uses their quarterly reports to paint a picture of the company's health to investors, hence the use of Pro Forma accounting, as opposed to strictly GAAP. Mandating that companies expense options in a certain way minimizes their ability to communicate with investors in a manner in which they see fit. Still, the regulations are in place, and despite all of the dire warnings about how the new rules would stifle innovation and devastate tech companies, it looks like things will be ok.