“It’s been a turbulent summer for Apple Computer CEO Steve Jobs. On June 29, the company said an internal investigation had uncovered problems with several stock option grants. In the ever-growing scandal surrounding backdated stock options, Apple was one of the largest firms to report irregularities,” Hannah Clark reports for Forbes.
“The stock fell 2.9% the following day, to $57.27, and drifted downward for two weeks. Then it turned around. By the time Apple reported earnings July 20, the shares topped $60. They closed at $69.59 on Aug. 3, and the summer seemed to be looking up,” Clark reports. “Then Aug. 4 arrived. Apple announced that it will ‘likely’ need to restate financial results as far back as 2002. Because of its expanding investigation, Apple will not file its latest quarterly report on time. Headlines blared. The news led that morning’s “What’s News” column in The Wall Street Journal. But the stock fell only 1.85% Friday, closing at $68.30.”
“Why aren’t shareholders running scared? Investors seem to be taking a wait-and-see approach. “The economic consequences of backdating aren’t yet clear for most companies,” says Harvey Pitt, chief executive of consulting firm Kalorama Partners and former chairman of the U.S. Securities and Exchange Commission. For the most part, investors don’t know who will be prosecuted, who will be sued, who will restate earnings and which CEOs may resign or be fired,” Clark reports.
Clark reports, “Jobs isn’t likely to lose his job. Though he received one of the misdated grants, it was later canceled, and he never profited from it. He hasn’t been on the compensation committee since becoming chief executive in 1997, and he doesn’t focus on day-to-day financial issues, Gardner says. After all, no one is suggesting that Apple has anything in common with Enron. For many of the companies implicated in the backdating scandal, their woes have nothing to do with any operating weakness. The headlines may blare and the regulators may rumble, but most implicated firms won’t suffer permanent damage as long as they don’t lose any senior executives.”
Full article here.
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