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MacRumors
Aug 14, 2006, 10:15 AM
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Several news sites are reporting on the Nasdaq notice (http://news.zdnet.com/2100-1040_22-6104812.html) Apple received last week which places Apple on warning for delaying its quarterly filing. Apple has been investigating (http://www.macrumors.com/pages/2006/06/20060630003057.shtml) irregularities with stock option granting over the years 1997-2001 that could have affected their financial statements. As a result, Apple has informed the US Securities and Exchange Commision (http://www.theregister.co.uk/2006/08/11/apple_to_miss_sec_filing_date/) that it will miss the deadline for filing the most recent quarterly figures.

This delay has prompted a warning from Nasdaq that Apple is not in compliance with the exchange's rules:

"We fully anticipated receipt of this letter," Apple spokeswoman Katie Cotton told CNET News.com. "It's a matter of procedure. We're focused on resolving this matter as quickly as possible."


Meanwhile, Apple has requested a hearing (http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=ind_focus.story&STORY=/www/story/08-11-2006/0004414800) and Apple's stock will remain listed in Nasdaq pending that hearing.

As first announced on June 29, 2006, an internal investigation discovered irregularities related to the issuance of certain stock option grants made by the Company between 1997 and 2001, and the Company has proactively informed the SEC. The Company is focused on resolving these issues as quickly as possible and plans to file its Form 10-Q following completion of the independent investigation by the special committee of Apple's outside directors.

DMann
Aug 14, 2006, 10:27 AM
This will be settled....

tsaxer
Aug 14, 2006, 10:34 AM
Well, Digg had this two days ago...
Anyway, I wonder what impact this will have on their stock this quarter.

IJ Reilly
Aug 14, 2006, 10:36 AM
Well, Digg had this two days ago...
Anyway, I wonder what impact this will have on their stock this quarter.

The newspapers had it on Friday.

The impact will depend on how much Apple has to revise their profit statements to comply, which I presume we'll learn soon.

Swift
Aug 14, 2006, 10:39 AM
After a week's decline, it's up this morning.

I don't know if Wall Street regards this as major. Last week, I think, was just some profit-taking after the recent runup from about $45.

mdntcallr
Aug 14, 2006, 11:19 AM
This will be settled....

Hah, it is sad to see Apple get pulled down into this. For apple to back date stock options, in order to have some executives get more money is a double edged sword.

sure some talented execs are happy. But the losers will be the stockholders who will be bitten by this snake.

My Bet, Apple will have to take a major quarterly charge!! perhaps enough to throw it into a loss for the quarter, yes i mean a charge wiping out all profits.

all of this hinges on how much of this bs happened.

no matter how you look at it, this isnt good for apple. however at least they aren't trying to cover it up.

Peace
Aug 14, 2006, 11:44 AM
The potentially bad part about this investigation is during the time of the options Apple had no "compensation committee".All compensation was approved by the board of directors.This could put Jobs in a bad position.

nagromme
Aug 14, 2006, 11:45 AM
Not owning any AAPL, I feel that following the law and rules are more important than short-term share price, so if there are charges for misconduct, so be it.

My platform of choice will continue regardless :)

IJ Reilly
Aug 14, 2006, 11:49 AM
The potentially bad part about this investigation is during the time of the options Apple had no "compensation committee".All compensation was approved by the board of directors.This could put Jobs in a bad position.

I think this was SOP at most corporations until recently.

kenaustus
Aug 14, 2006, 11:55 AM
As I understand it, Apple will end up restating earnings for previous years, resulting in lower profits in those years, or maybe even a loss. Basically rewriting history, which isn't that important to investors who are looking at what Apple is doing today, or guessing what Apple will do in the near term. If this rewritten history is "bad", just think about how bad things were before Steve J returned to Apple!

obeygiant
Aug 14, 2006, 12:01 PM
quarterly filing can be dangerous. UPS stock tanked like 12 bucks after they
reported 97 cents of an expected range of $0.97 - $1.01.

ArizonaKid
Aug 14, 2006, 12:15 PM
As I understand it, Apple will end up restating earnings for previous years, resulting in lower profits in those years, or maybe even a loss. Basically rewriting history, which isn't that important to investors who are looking at what Apple is doing today, or guessing what Apple will do in the near term. If this rewritten history is "bad", just think about how bad things were before Steve J returned to Apple!

Past practices that break SEC rules are most certainly a concern to investors, especially investors that are forward looking. Trust is essential, especially companies like Apple that have much of the same management team in place from when the irregularities occurred.

I noticed last year in my MGT 410 Course, Business Ethics, that Apple was ranked for having the worst management staff. Please note that that is in relation to board members that potentially hold a conflict of interest.

I asked my professor how Apple could be ranked for having a poor management staff when Steve Jobs was turning around the company. He stated the measure was not on performance, but rather from a business ethics standpoint. Nonetheless, he stated in his experience "just wait", something usually happens with management and board structures so poor.

Hmm...I now wonder if he was right.

D*I*S_Frontman
Aug 14, 2006, 12:34 PM
RATS!!

I was hoping this news would cause Apple Stock to tank.

Nope.

Up 41% for the year, 24% for the month, and 2% on the day at the time of this writing ($64.92/share)

I was broke when Apple Stock was $12/share in 2002. Had I scrounged to buy then I'd be sitting pretty now. I even made that recommendation to friends...

Today I thought the usual anti-Apple fearmongering Wall Street is known for would have hit the stock harder and afford another bargain opportunity.

Oh well...

IJ Reilly
Aug 14, 2006, 01:23 PM
I noticed last year in my MGT 410 Course, Business Ethics, that Apple was ranked for having the worst management staff. Please note that that is in relation to board members that potentially hold a conflict of interest.

Several years ago Apple was cited as an example of a corporation with too few independent directors. An effort was made to correct that issue, IIRC. A number of "outside" directors were brought in at that time. Al Gore, for one. Given the apparently length history of this, I expect the guy most likely to be the target of a necktie party would be Fred Anderson, the CFO for all of those years. He's already gone though.

applekid
Aug 14, 2006, 02:05 PM
So, as a worried stock-holder, is now a good time to sell? :confused:

I got a few shares I could cash in now, or I could ride this out.

By the looks of things, it seems like Apple hasn't taken a hit on this news except the first time it was announced which I remember dropping the price only a couple of dollars at most.

ulyssespdx
Aug 14, 2006, 02:33 PM
Folks, this happens *all the time*, to companies of all sizes--adjustments, restatements, missing SEC deadlines, etc. It's not "irregular", and Apple isn't going to announce any significant revision in profits. It's administrative juggling. It's also unrelated to the recent stop option investigation--which also happens to companies of all sizes. And is right now.

noservice2001
Aug 14, 2006, 03:44 PM
me want aapl...

Brines
Aug 14, 2006, 04:00 PM
I'm predicting that AAPL will lose some points after they actually come out with the report and it takes away from some of their profits. After that happens, I'm planning on buying about six shares. I think Apple as a company has a lot of room to grow. What do you guys think?

BKF
Aug 14, 2006, 04:21 PM
This is strictly amateur analysis but what seems particularly not great about this is that AAPL from basically the beginning of the year had been on a protracted slide down until that last quarterly report came out and beat expectations. Then things turned north. So go back and revise/remove that report... and what happens?

Having said that, if we see the magic phone or next generation iPod in the next month or so, I think people will want in.

terrymr
Aug 21, 2006, 01:41 PM
Actually this whole problem is meaningless ... at issue is the SEC requirement that sock option grants be reported as an expense. The problem is, that all along accountants have said valuing stock options in order to report them as an expense is extremely difficult because they cost the company nothing and their value is only a paper value until they're sold or exercised anyway.

So even if the outcome of revaluing the options results in a reduction in apple's reported profits ... it won't have made a bit of difference to how much money came in and went out during the period.

princealfie
Aug 21, 2006, 01:51 PM
Would this mean that Dell buys Apple if Jobs get in a precarious position? :eek: