Analyst: Apple restatement due to options irregularities not expected to be significant

“Apple Computer said on Wednesday that an internal review had found that Steven P. Jobs, the chief executive, knew that the company was backdating some stock options granted to employees to inflate their value,” Laurie J. Flynn reports for The New York Times.

“The company said Mr. Jobs did not knowingly receive any backdated options and had not benefited from the practice, and that he did not understand its accounting implications. A company spokesman, Steve Dowling, said it was possible that there had been “irregularities” with some options granted to Mr. Jobs, but he declined to elaborate,” Flynn reports. “Apple, riding high on the popularity of its iPod music player, repeated that it would most likely need to restate past financial statements, but said it had not yet determined the amount or for which periods.”

“Apple revealed in June that it had discovered irregularities related to stock options awarded between 1997 and 2001,” Flynn reports. “By doing so, it joined more than 100 companies, including Microsoft, that have announced investigations into their options practices.”

“Apple said the investigation found no misconduct by anyone on the company’s current management team. Mr. Dowling said the company was not required to discuss Mr. Jobs’s role in the options grants, but was doing so in the interest of full disclosure,” Flynn reports.

Flynn reports, “Charles R. Wolf, an analyst with Needham & Company, said that investors were likely to respond favorably in the long term, and that he did not expect Apple’s restatement of earnings to be significant or to hurt its future performance. ‘The major risk in the backdating of options was that somehow Steve Jobs was actively involved,’ Mr. Wolf said. ‘The announcement today eliminated that possibility.’ Mr. Wolf said it was within reason that Mr. Jobs would not have paid attention to the backdating, particularly given that it was common and legal. ‘I don’t think he’d know an asset from a liability,’ Mr. Wolf said of Mr. Jobs. ‘That’s not his game.'”

Full article here.

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20 Comments

  1. Ya know, stating Jobs wouldn’t know an asset from a liability is pretty disparaging. He’s a smart guy and I’m sure knows basic economics on which his company runs. Now all the backdating mess sounds like it could be fairly complex and would be handled by his underlings, so it’s unlikely he knew or understood the implications of this, but to say he doesn’t understand basic economic principles is pretty disingenous on Mr. Wolf’s part!

  2. New iMac? Don’t I wish.

    Sadly, my scandal-era G3 starts right up and runs real strong .. just not strong enough to put much newly emerging software on it. I wish it would stop running so my spouse would let me get a new one. grrrrrrr …

    heh

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