“Now that an internal investigation over Apple Computer Inc.’s stock-option practices has helped abate investor worries over Steve Jobs’ role as CEO, a key lingering concern will be the effect of pending earnings restatements,” May Wong reports for The Associated Press.
Wong reports, “Apple said Wednesday its three-month investigation did not uncover any misconduct of any current employees but did raise “serious concerns” over the accounting actions of two unnamed former officers.”
“Apple said it will likely have to restate some earnings due to revised tax and stock option-related charges. Auditors are still reviewing the situation, and Apple said it has not yet determined the extent of the financial effect,” Wong reports.
“The looming restatements could dramatically reduce some of the windfall generated during the company’s recent run of record profit, analysts said,” Wong reports. “Apple has reported profit totaling $3.1 billion during the past four years. If the restatements are severe, it could dent Apple’s stock, IDC analyst Richard Shim said.”
Full article here.
MacDailyNews Note: And, if the restatements are minor, it probably won’t dent Apple’s stock.
Wong also reports for AP ina related article, “Ignorance can be bliss, but it’s not a tight defense, lawyers say. When Apple Computer Inc. disclosed Wednesday its internal investigation had uncovered some stock-option backdating, the company said CEO Steve Jobs was aware of the practice but unaware of its accounting implications. The probe also did not find any misconduct by Jobs or other current officers, the company said.”
“‘Ignorance is usually not a good defense,’ said Jeffrey Siegel, a veteran securities lawyer and partner at Blank Rome LLC in New York.’Executives are expected to understand the laws applicable to their companies and the rules of their required disclosures,'” Wong reports. “The practice of backdating occurs when a stock option’s exercise price is set at a point lower than the prevailing market price, which can inflate the recipient’s award. The manipulation itself isn’t necessarily illegal, but securities laws require companies to properly disclose the practice in its accounting and settle any charges that may result.”
Full article here.
MacDailyNews Note: Apple will announce Q4 earnings on October 18th.
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Apple announces update regarding stock option grants – August 03, 2006
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Apple announces update regarding stock option grants – July 05, 2006
UBS: stock options probe unlikely to hurt Apple – June 30, 2006
Apple joins growing list of companies entangled in stock option ‘irregularities’ – June 29, 2006
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Fred D. Anderson joins Apple Board – June 08, 2004
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