Last week was “quite the week for Apple shareholders. The company announced an incredible second quarter, with profit up 88 percent, blowing past analysts’ estimates. Its stock pushed above $100 a share for the first time ever,” Joe Nocera writes for The New York Times.
“Then there was this options backdating news of the week: The Securities and Exchange Commission brought formal charges against Nancy Heinen, the former general counsel of Apple, and Fred Anderson, its former chief financial officer — settling charges with the latter for what amounted to a small slap on the wrist. (Attorneys for Heinen vow to fight the charges.) These were the two executives the Apple board has been pointing the finger at ever since it completed its internal investigation,” Nocera writes.
Nocera writes, “The SEC seemed to agree: Its body language this week strongly suggested that it had zero interest in pursuing Jobs, to the palpable relief of the many fans of Apple. The agency’s position seems to be that the chief financial officer and general counsel are the ones who are supposed to ensure that options are handled correctly, and therefore both Jobs and the Apple board are off the hook.”
“However, after settling the charges, Anderson pointed the finger right back at his old boss. Anderson had been involved in an options grant that Jobs made to his executive team in early 2001 — also the subject of a federal investigation — and he claimed that he told Jobs there might have to be an accounting charge if the options weren’t handled correctly. There is not much doubt that Anderson made this statement because he felt unfairly scapegoated by Apple and Jobs,” Nocera writes.
Nocera writes, “With all the finger-pointing, it is difficult to parse whether Anderson, a widely respected figure in Silicon Valley, did something worthy of government sanction. What is far clearer, however, is that Jobs simply does not deserve the free ride he’s been getting from everyone — the Apple board, company investors, and government regulators.”
“Let’s be clear here. I am not saying he committed a crime. What I am saying is that it is pretty obvious by now that Jobs was extremely involved in both of the options grants that have become such problems. The notion that Jobs, a notorious micromanager, would be oblivious while his team worked on these grants is pretty ludicrous,” Nocera writes.
Full article here.
MacDailyNews Take: Joe Nocera, for The New York Times, February 4, 2006:
“My iPod died… Like all iPods, it came with a one-year warranty. Although Apple sells an additional year of protection for $59, I declined the extended warranty because the cost struck me as awfully high — a fifth of the purchase price of the device itself… Although the tech support guy quickly diagnoses your problem — a hard drive gone bad — he really has only one suggestion: buy a new iPod. ”Since it is out of warranty,” he says, ”there’s nothing we can do.” You’re a little stunned. But you’re not ready to give up. On the Apple site, there’s a form you can fill out to send the iPod back to Apple and get it fixed. But you do a double-take when you see the price. Apple is going to charge you $250, plus tax, to fix your iPod. There is no mistaking the message: Apple has zero interest in fixing a machine it was quite happy to sell you not so long ago. Now you’re reeling. You’re furious. But what choice do you have? You can’t turn to a competitor’s product, not if you want to keep using Apple’s proprietary iTunes software, where you’ve stored all the music you love, including songs purchased directly from the iTunes Music Store, which you’ll lose if you leave the iTunes environment. So you grit your teeth and buy a new iPod. Of course since it’s a newer machine, it has that cool video capability. But you’re still angry… Larry Keeley, who runs Doblin Inc., an innovation strategy firm warns, the day will come when the iPod has a major competitor. ‘There will be competing platforms, and they’ll get robust, and other companies will figure out how to crack iTunes,’ he said. At which point, Apple will reap what it is now sowing.”
Okay, so crybaby wouldn’t buy the extended warranty, therefore Apple wouldn’t honor a nonexistent warranty, and unlucky New York Times readers were subjected to this fool’s laborious rant last February.
It seems his rant has simply shifted gears and continues today in a new form.
Shut up, Joe. Next time buy the warranty, genius. It beats reading your lame attempts to build mountains out of molehills.
[UPDATE: 1:50pm EDT: Updated with Take, reference to Nocera’s iPod screed. Thanks to MacDailyNews reader “David O” for the heads up.]
NYT ass, go back to trying to save your toilet paper rag from bankruptcy.
First?
This is typical NYTimes cr*p. Jobs is a “micro-manager” when it comes to products and innovation. There’s no evidence that he micro-manages HR and accounting administration. Even a micro-manager has to focus when he’s running a $20B corporation. I doubt that Jobs spends equal time on back office functions as he does on innovation. But why should evidence and reason impede the opining of a NYTimes writer in this case? It never does otherwise.
Why have a legal counsel and a financial manager if they are not charged with the duty of assuring that the legal requirements and the accounting requirements are properly met. THEY are the ones with the duty and power to make sure the company does its business in a legal manner. Anderson merely had to make the proper NON-CASH entries in the books for the stock option grants to have been handled correctly. He did not.
(MDN magic word “blood”… which is what these writers are after)
I sense that even though Jobs may be a notorious micro manager, he is only so regarding the experience that Apple brings to market. Not when it comes to stock options. $.02
Yeah so punish all the shareholders by removing Jobs? If it is found that Jobs profited from the back-dating then I say just make him pay back the profit to the share holders. But removing him would be devastating for Apple and it’s shareholders and I think the SEC realizes this fact.
This writer is clueless. Options backdating itself is not a crime. The crime is how its reported via the accounting. I’m not certain that Jobs is as involved in the accounting as he is in marketing and product design.
Apple extreme cooperation with the SEC, and their having done an internal investigation and handing those results over is what led the SEC to actually announce last week that they were’nt going after Apple or Jobs.
And what proof does he have? From what I’ve read, Apple has been extremely revealing to the SEC regarding this issue. I’m sure if there were some kind of proof, he would have been punished. Finger pointing after the fact, is to save face and that’s pretty clear.
Also, as CFO, Anderson could have done to things if Jobs was involved.
1. He should have documented if Steve asked to do these things.
2. As CFO, and soley responsible for financial matters regarding Apple, if Steve did request something like this, he could have simply said “No Steve, that’s illegal.”
He didn’t do either. Thus the blame falls on him.
Simple.
Oops, good job Jake.
If the NY Times were lucky, Steve would buy it and keep it from going under…..
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It’s obvious the guy doesn’t like Jobs.. he has no facts to base his judgement on. he’s merely posting his opinion.
Also when’s the last time the SEC covered up for a CEO?
Unbelievable Bull Sh*t………
If it were not for Jobs Apple would most likely be out of business by now. Jobs completely re-invented Apple turning it from a beleaguered whipping boy, to one of the Hottest consumer electronics companies in history.
The share holders are lucky to even have stock at this point. $4 dollar stock to $100+….WTF is there to complain about.
They should be happy to give Jobs whatever amount he could have gained from backdating not complaining about it especially since his salary was only $1 dollar per year.
Anyone wanting to nail Steve Jobs to the cross needs to have his head examined.
Who is this guy writing such nonsense?
“…it is pretty obvious by now that Jobs was extremely involved in both of the options grants that have become such problems.”
So let’s see, the independent investigators found SJ to be in the clear, the board has decided he’s in the clear, and, apparently, the SEC has decided he’s in the clear, but because Fred Anderson made a comment, now it should all be SJ’s fault? That’s great reporting! Top notch! Enderle, is “Joe Nocera” your new pen name?
“it is difficult to parse whether Anderson, a widely respected figure in Silicon Valley, did something worthy of government sanction.”
Why is this so difficult to parse? He was sanctioned. That should be a strong indication that he “did something worthy of government sanction.”
“it is pretty obvious by now that Jobs was extremely involved in both of the options grants that have become such problems.”
Thus, while it is difficult to determine that the one who was punished and most directly responsible for the practices under investigation was guilty, it is clear to the author that Jobs should be held accountable. The logic is baffling.
I agree 100% that justice should be served without regard to status. So, if Steve is guilty let’s bring the evidence forward and levy fines where appropriate and finish this up.
After-the-fact finger-pointing does not constitute guilt. Personally I don’t believe for one moment that the SEC would look the other way if SJ was even potentially holding or withholding evidence against himself. While SJ may be the current darling of Wall Street this has only been very recent, and institutions like the SEC would be very hard pressed to dole out favors to the likes of SJ.
If there’s evidence let’s see it and act on it – So put up or shut up, is my final response to the NYT.
Unfortunately, these back-seat drivers seem to know better than anyone else. Do they have special access to documents we don’t have? Are they lawyers? Do they consult with lawyers before writing their blogs? Do they have credibility in the field governing laws enforced by the SEC?
As a fellow back-seat driver, I predict the answer is “NO”.
Are we sure this story isn’t actually from the SJ Merc? ;P
In evaluating Mr Nocera’s views on Jobs and Apple, it’s helpful to be aware of a column he wrote on February 4, 2006. In that piece he complains on and on and on about his problems with Apple not fixing his iPod. It’s past the one year warranty, and he chose not to purchase the extended coverage. He ends up predicting doom for apple: “Apple will reap what it is now sowing.” It’s quite a tantrum. So now we’re supposed to think he has an unbiased and accurate opinion about Jobs guilt in the options mess? Highly unlikely.
http://query.nytimes.com/gst/fullpage.html?res=9401EFD8163EF937A35751C0A9609C8B63
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-Great find, DavidO!!
-Unfortunately, this type of article can have a BIG impact on government decision-makers at SEC and similar outfits. Often, they care about bad press at least as much as they do about doing the right thing. So an the insinuation in a major mainstream media outlet that they are favoring a CEO can be enough to get them to change their mind and file charges. It’s very easy for them to rationalize to themselves that they’ll led a judge/jury sort it out. Bottom line: SJ is not out of the woods until the SEC is explicit that they’re going to leave him alone, which hasn’t happened yet (they only said they would leave Apple, the corp., alone).
Another brainless hack with nothing better to do than throw stones at his betters.
While the buck stops at the CEO, the CEO is not responsible for Accountants and Lawyers committing illegal acts. Accountants and Lawyers have professional standards they must live up to. If they break the law, they are responsible, even if the CEO ordered them to break the law.
There is absolutely no evidence that the CEO gave any such orders.
The Times is just fishing for readers. Truth is just another casualty at The Times. SOP.
The NYT writer is soo of base. Someone correctly noted that backdating the option is NOT illegal, what is illegal is the way it’s accounted for, and that is Andersons job.
If Anderson was faultless, he certainly could have fought this, to protect the $3.x million of his own funds he forked over> Remember, Apple has D&O insurance that would have paid for Andersons legal fees, so settling for a lower amount than the cost of litigation wasn’t the motiviation here!
I don’t understand Andersons public rant, if he was guilty, and he did get off very light, (no sanction from his precious board acitivites) he should have thanked the SEC and gone on with life.
Chaz
… and let’s bring back the fine tradition of the lynch mob. As Americans, it’s our right to enforce justice when the courts and commissions that preside over our society fail to do their duty. I’ll bring the rope. Who’ll fetch the torches?
Remember, “No justice, no peace.”
Moving on… Is this article a reprint from one published six months ago?
Screw off Nocera and the NYTimes.
Go back to wasting paper writing about your first love–how many ways you hate George Bush and anything Republican.
haven’t we been over whether Jobs new or not already back in October?
http://www.nytimes.com/2006/10/05/technology/05options.html?ex=1317700800&en=b250a54b79ec317b&ei=5088&partner=rssnyt&emc=rss