Piper Jaffray: Steve Jobs not at risk in stock options case

“Apple CEO Steve Jobs, who is reportedly seeking outside legal counsel amidst stock options investigations, will not likely be implicated in the case, according to industry analyst Gene Munster of Piper Jaffray,” MacNN reports.

“Citing today’s earlier report that individuals within Apple falsified certain options documents, and that these falsifications will be made public in the 10-K report that the company is expected to file on Friday, Munster projects a very low liklihood that Jobs was involved in the falsification of options documents. The analyst does expect the investigation to continue to point to former Apple officers, however, and sees the pullback in Apple shares as a buying opportunity,” MacNN reports. “Piper Jaffray maintains an ‘outperform’ rating on Apple’s stock with a price target of $99.”

Full article here.

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  1. Not only Piper Jaffray, but also JP Morgan and Soleil Securities Group have all announced the same thing: there’s no evidence that SJ is personally tainted by the scandal, and that his retaining a lawyer is not necessarily any indication of potential wrongdoing.

    Apple Computer is expected to file its 8-k report by December 29, 2006, at which point all this should be cleared up. (Unless Apple punts and asks the SEC for an extension, which would take us to mid-January.)

    Wait for the actual facts to be developed.

    For more discussion, see the MDN article and commentary here.

  2. The buck stops at the top, and Steve’s at the top. I’m a fan of Steve and all his Apple employees. BUT, lets not say anyone’s off the hook until the truth is known. And if Steve did not know, (1) he should have known and (2) he should be instilling a much more forceful policy of Integrity at Apple. The lack of integrity will hurt Apple employee’s, stock holders, and Apple users like me. There have been too many corporate scandles with too many corporate executives saying they just didn’t know. Integrity counts!

  3. Apple’s peak?

    Nah. Long way away.

    Apple has penetrated the minds of a small fraction of the public. The vast majority are still slaves to the idea that technology is nothing more than a toaster or a stapler. The majority of those who use information technology have been imprisoned for a very long time by the “embraced and extended” world of mediocrity.

    Apple’s potential for growth is directly tied to her ability to continue to deliver innovation, to push the “what have you done for me lately”envelope, to make us think we need something by doing nothing more than building a better version of that somthing.

    Apple’s peak will be reached when I have instant and simple access to all the media I want, wherever I am, whatever I’m doing. Her peak will be reached when I merely have to think of something and it appears.

    For now, Apple is still in the nacent form of true greatness.

  4. Name any company that has 100% integrity among it’s employees. You’re living in a fantasy land if you think you’re going to find one. Apple is no different than any other large corporation. You’re always going to have a few bad apples in the bunch (pardon the pun). And there is no way that any CEO of a multi-billion corporation can know everything that is going on within the company at all times. Get off of the utopian ideas and get real people.

  5. Apple Fan, integrity does indeed count. It counts a lot. Without it, a lot of shareholder class-action lawsuits follow. Short sellers will punish the stock. And the feds will investigate you and possibly put you out of business and even in jail.

    So given how high the stakes are, you can be sure that Apple’s board of directors (BOD) is already, and will be, scrutinizing Apple’s accounting practices, compensations practices, revenue recognition practices, expense management, public disclosure compliance, environmental compliance, and a whole raft of other corporate governance issues.

    And you can also rest assured that if Apple’s BOD saw any taint coming from Steve Jobs’ continued role as CEO, he would be dumped.

    Based on the price action in AAPL today (initial dip, followed by erasing almost all the losses by mid-day), Wall St.’s view appears to be:
    – The option scandal will be resolved soon (anywhere from two days to two weeks);
    – Some former employees or directors may go to jail;
    – The company will restate its results going back to 1997 and pay a fine; and
    – Steve Jobs will remain as CEO as the company moves forward.

    Let’s wait and see what facts unfold as Apple files its annual report with the SEC.

  6. Utopian ideas? We’re talking about the Chief Financial Officer (CFO) possibly falsifying stock option documents, not the loading dock employee who swiped some packing peanuts. Sure, there are always bad apples (you started the pun ” width=”19″ height=”19″ alt=”wink” style=”border:0;” />), but at the top, with the people a CEO works day-to-day with, things have to be better. A CFO is one of the most trusted executives the CEO relies upon. It is hard to imagine how the CFO could have done this – hoepfully he didn’t!!

    Sure, there will always be thieves and many times we’ll be fooled. Maybe Steve trusted the CFO “too much” and the CFO took advantage? I don’t know; maybe we’ll never know.

  7. PJ has been correct more often than not regarding Apple in financial terms. Most of the rest of Wall Street has lagged the market valuation of the stock. They say it’s a buying opportunity.

  8. You hire a very qualified CFO to do his work. How would you know that he has falsified documents unless it is blaringly obvious. The CEO can not do everyone’s jobs for them. It’s unfortunate this moron put Apple in this position. I really hope it all works out. If Steve was not aware of it, and why would he be it’s not like he needs the money, I don’t know how they put him in jail.

  9. Option backdating is perfectly legitimate. The problem occurs when Apple, for example, fails to note that option grants were backdated. This changes the bottom line because operating expenses are hidden making profits appear larger than they really are. So Apple has an obligation to clear this up. Taken in this context, if SJ is not involved in trying to hide operating expenses, the seriousness is being overstated either out of ignorance or in a deliberate effort to manipulate the stock price, making some brokers rich.

  10. Even if SJ didn’t know about it, the risk is that the San Francisco federal prosecutor could indict Apple as a corporation (a la Arthur Andersen). Or the prosecutor could claim that Jobs SHOULD have known about it (like “Apple Fan”).
    As I’ve noted before, all it takes is a politically ambitious prosecutor who has a “flexible” sense of the meaning of justice, such as Spitzer in NY. Spitzer’s most notable cases where later thrown out by judges, but in the meantime he destroyed careers and damaged companies. Now he’s the NY governor.
    I hope SJ and Apple get through this unscathed, but we’re not out of the woods yet!

  11. As Ardie pointed out “This changes the bottom line because operating expenses are hidden making profits appear larger than they really are. “

    The really humorous thing is that Apple may actually be due TAX REFUNDS for the years that the expenses for the options were understated!

    Correcting to adjust for the higher expenses WILL lower the reported income and therefore the taxes that were paid.

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