This Fortune story gave agood reminder that once all companies are required to expense stock options, as FASB is likely to propose this quarter, the revision to the currently-reported earnings will be substantial. The article quoted numbers like 2002 S&P 500 reported earnings were inflated by 23% because stock options were not expensed. It also provides examples of some leading technology stocks should options be expenses:
2002 earning will be revised from $0.79 to $0.03; 2003 earning from $1.10 to $0.33.
Apple Computer (AAPL):
2002 earning will be revised from $0.18o -$0.46; 2003 earning from $0.19 to -$0.27.
2002 earning will be revised from $0.08 to -$2.27; 2003 earning from -$0.09 to -$0.93.
2002 earning will be revised from $0.18 to -$0.63; 2003 earning from $0.26 to -$0.10.
With the Nasda P/E ratio standing at 93 (as mentioned in the same article), I am more and more inclined to take action to short the market by purchasing long-term put options on the indexes.