Sun saves $315m by not expensing options

Safety in numbers

By Ashlee Vance in Chicago • Get more from this author

Posted in Financial News, 11th May 2004 07:49 GMT

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Sun Microsystems has long opposed expensing stock options and a recent regulatory filing shows one reason why.

Sun's third quarter loss of $670m would have been 26 per cent wider if it had expensed options given to employees, according to a quarterly filing with the US SEC (Securities and Exchange Commission). Sun puts its third quarter loss at $985m with the options included as an expense.

It's not surprising to see a research and development-focused company such as Sun fight the trend toward expensing options. The company must hold on to key talent in order to stay competitive. Sun, more than most, owes much of its reputation to brains walking through Santa Clara halls.

Still, other technology companies such as Amazon.com and CA have agreed to count their options as an expense. Those in favor of expensing options tend to argue that options count as a real cost and should be counted to give an accurate picture of a company's performance.

Sun's filing also revealed that it coughed up 20m shares of stock to purchase Opteron server maker Kealia. Sun co-founder Andy Bechtolsheim ran Kealia and is now back at Sun. ®