> How is issuing stock options financial engineering?
Because it makes your balance sheet look stronger than it really is: you book potential earnings as something real. The crude example is Intel's 2000 profit margins, for example, padded by $1 billion when it sold off its holdings of Micron. But firms like Cisco have turned stock pooling into an art form; Graham Lea had a good writeup of this at <http://www.theregister.co.uk/content/archive/14016.html>, where he wrote: "The company's acquisitions are mostly by pooling, which results in distorted accounts. It also has enormous stock-option debt, and customers' purchases are financed via related party transactions. So long as Cisco is on the up, this works, but it's a precarious edifice that stands in peril if the company were to fail to meet financial analysts' expectations." Cisco just announced its axing 15% of its workforce, so we're about to find out just how precarious that edifice really is.
-- Dennis