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Volcano Corporation (VOLC) Message Board

  • westonct45 westonct45 Mar 4, 2010 1:44 PM Flag

    Stock compensation

    Today's press release states:

    "Excluding stock-based compensation expense of approximately $13.3 million, Volcano expects to report net income of $0.30-$0.35 per diluted share for fiscal 2010."

    Give me one good reason why stock-based compensation should be excluded.

    In my opinion thers isn't, to the contrary. If you appply the 2009 per share figure of 0.22 cents (keep in mind, a year with NO profit) for stock-based compensation on 2010 the correct reading would be:

    "Including stock-based compensation expense of approximately $13.3 million, Volcano expects to report net income of $0.08-$0.13 per diluted share for fiscal 2010."

    Makes it look quite different doesn't it? It also has the benefit of allowing the shareholders to see that management gets a disproportionate part of the anticipated profit:

    Management: 22 cents
    Shareholders: 8-13 cents

    Why wouldn't I as a shareholder be entitled to at least as much as the management? It's not like they have no salary.

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    • They have a very high opinion of themselves, don't they? When their stock hits 50, I won;t be so hostile. For now, it looks like just mroe greed by execs and screw the shareholder. They must be getting advise from Goldman Sachs.

      • 1 Reply to juryman07
      • You need a lesson in accounting. Stock comp under FAS123R is a non-cash accounting charge to earnings. It's based on the black-scholes valuation model, which most companies use to value stock options. In reality, it may or may not mirror what the executives actually receive when they sell their stock. In the case of the CEO, he had options awarded to him many years ago at $0.11 each. The FAS123R expense would have been negligible - however, with the stock price where it is now they are worth millions. On the other hand, options awarded now, which are being expensed at a much higher rate (in the hundreds of thousands of dollars), could end up worthless to the executive if the stock price does not exceed the strike price.

        This company is well managed and they have an excellent product. They will do well long-term. My guess is that within 5 - 7 years they will be bought out at a nice premium by one of their competitors.

    • I dont know the answer to your post, however I am sure it is standard accounting. If you truly want an answer, It probably wont be here. As you can see, There are very few posters here. One thing I am hoping is that there are very few retail investors in this stock. The stock price has been doing very well recently. Maybe, just maybe, a profitable year will increase demand for this stock. If we are even luckier they will have to split to increase share totals. Also, the short % is still high. They will have to start covering soon.

      • 1 Reply to timrawa
      • Thanks for your thougtful post and yes, I noticed this a sleepy board, which more often than not is a blessing, just look at the garbage spewn at many others day in and day out.

        Ref standard accounting, that may very well be the case, but I'm quoting the press release not the quarterly report. In the press release the management has full control over what they write and not. In this case, in my opinion, they skewed reality, making it less obvious that they will take a much bigger slice of the eventual 2010 profits than the shareholders will get.

        I agree that the future of the company looks very promising, but if management takes the lions share of the profits, it will impede the rise of the share price, which is the reason I invested in this company.

        I'm not against management being rewarded for a job well done, but not before they have generated the profits to pay for it and I as a shareholder get my fair share.

 
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