Apple Believes SEC Investigation Poses Risk

Discussion in 'MacRumors.com News Discussion' started by MacRumors, Feb 5, 2007.

  1. macrumors bot

    MacRumors

    Joined:
    Apr 12, 2001
    #1
    [​IMG]

    In Apple's quarterly 10Q filing, filed last Friday, Apple acknowledged the ongoing SEC investigations into the company's past stock options backdating practices as a considerable risk, and adds that the potential exists for further delay of SEC filings and possible delistment from a prestigious NASDAQ market.

    The report also addresses many other risks facing the company that often go un-noticed (i.e. economic conditions, war, terrorism, etc.), however the acknowledgment nevertheless comes as a reminder that the SEC's investigation of Apple's accounting practices remains ongoing.

    Note that delistment from the NASDAQ Global Select Market does not necessarily mean delistment from the general NASDAQ market. The NASDAQ Global Select Market, created in July 2006, is for companies that satisfy the "highest initial financial and liquidity qualifications."

    Raw Data: Apple's Quarterly 10Q (pdf)


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  2. macrumors 68020

    P-Worm

    Joined:
    Jul 16, 2002
    Location:
    Salt Lake City, UT
    #2
    Has anyone heard why the SEC is taking so long? What are the suspicious of in particular?

    P-Worm
     
  3. macrumors P6

    Peace

    Joined:
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    Location:
    Space--The ONLY Frontier
    #3

    Certain grants given to Steve Jobs.


    This is not good.
     
  4. Editor emeritus

    longofest

    Joined:
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    Falls Church, VA
    #4
    The grant to Steve in December 2001 is what they are most concerned about. They are taking a while because there was falsified documents involved, and whenever you have those involved, its hard to get at the truth.
     
  5. macrumors newbie

    Joined:
    Oct 8, 2003
    #5
    Good Business

    Hey, they're just trying to be honest. It's not the end of the world and I believe they will come out stronger in the end.
     
  6. macrumors 603

    whooleytoo

    Joined:
    Aug 2, 2002
    Location:
    Cork, Ireland.
    #6
    The Street suggests Google CEO Eric Schmidt is preparing to take the reigns temporarily should Jobs be overly distracted by possible legal action.
     
  7. Editor emeritus

    longofest

    Joined:
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    Location:
    Falls Church, VA
    #7
    They know nothing. Same guy said that Steve would take a leave of absence from Apple. Its an interesting idea, but I doubt it has any kind of inside knowledge behind it.
     
  8. macrumors 68030

    Analog Kid

    Joined:
    Mar 4, 2003
    #8
    Every 10-K/Q includes a "doom and gloom" section that list of potential risks to the company, ranging from the very real to the fanciful. This statement, in itself, doesn't mean anything more than that. No news here, really-- we knew the investigation was happening, and the consequences are usually worst-case scenarios lest the be sued later for painting too rosy a picture.
     
  9. macrumors 68040

    Joined:
    Jan 10, 2005
    #9
    hopefully this debacle makes companies realize that stock-options are retarded. instead of giving employees possibility of buying shares at a discount at some future date, why not simply give them bunch of shares at market-price, with the condition that they can't sell them for certain time-period and/or until shareprice reaches certain level? because with options they can make money even when shareprice goes down? well, why should they be rewarded then? why should some execs be rewarded when they do a crappy job?

    options are just a "get rich quick"-scheme. bunch of execs giving each other even more money...
     
  10. macrumors 68040

    Stridder44

    Joined:
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    California
    #10
    In English?



    Personally, I'm looking forward to someone to saying something stupid regarding "Apple fanbois" and make themselves look like an ass.
     
  11. macrumors G5

    gnasher729

    Joined:
    Nov 25, 2005
    #11
    To explain a bit further: If anything bad happens to a company, and the share price drops because of that, there will be some ambulance-chasing lawyers who try to make money by suing the company on behalf of the shareholders (who are usually not asked whether they actually want to sue or not). However, if whatever bad thing happens has been mentioned as a possibility in the 10-K/Q statement, then the company can relax and say "Look here, we told you this might happen, and you still bought or kept our shares, so it's your own fault". If anything bad happens that was _not_ mentioned as a possibility in the 10-K/Q, that's a problem. So anything that is remotely possible goes in there.
     
  12. macrumors 68020

    EagerDragon

    Joined:
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    MA, USA
    #12
    Just get in there and complete the investigation. Delaying helps noone and hurts every one.
    Get it over with.:apple:
     
  13. macrumors P6

    twoodcc

    Joined:
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    #13
    well this can't be good....i just hope they hurry up and get to the chase with this.....
     
  14. macrumors 68000

    dernhelm

    Joined:
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    middle earth
    #14
    Wait. Let me get this straight. You want to know why a government agency is taking a long time to do its job.

    :rolleyes:
     
  15. macrumors P6

    ~Shard~

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    #15
    Hahaha, it's the SEC, good luck with that one... :p ;)
     
  16. macrumors 68000

    echeck

    Joined:
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    Location:
    Boise, Idaho
    #16
    We all knew this investigation was happening, so things aren't any worse off than they were last week.

    This is basically just a required disclaimer, nothing more.

    On the flipside, if investors get cold feet and Apple stock drops back to around $50, I'll be buying. ;)
     
  17. macrumors 68040

    KingYaba

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    Up the irons
    #17
    AAPL is taking a hit, that is for sure.
     
  18. macrumors 6502a

    Peel

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    Seattle
    #18
    My thoughts exactly. However, I still expect this acknowledgement of the facts (that everyone already knows) to have a temporary negative affect on the share price.
     
  19. macrumors P6

    ~Shard~

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    #19
    If that happens, I'll be shorting and then buying... :p ;) :cool:
     
  20. macrumors 6502

    Joined:
    Feb 16, 2005
    #20
    Just when things seemed rosy on Apple land. I think Apple's way of dealing with SEC is just not conducive to a rapid closure. Come on Apple, get your act together.
     
  21. macrumors member

    Joined:
    Apr 10, 2003
    Location:
    tokyo, japan
    #21
    yep, it's called a "disclaimer"....... of course ongoing investigations could cause additional expense, headaches, de-listings, god knows what else.....

    And they have to mention pretty much any and all possible disasters and whatever else that could affect the bottom line... war, SEC investigations, market forces, you name it, it all goes in there. It's partly about "managing investor expectation", aka providing an ongoing 'reality check', as it is about covering their corporate behinds....

    [...reaction to troll...]

    So we all wish them well, hope the distractions end soon, and that whoever is responsible goes to prison!!!! (I jest)

    uh, as long as it isn't our favorite demi-god/Reality-Distortion-Field-Wizard-of-Woz, Stevie-J!! :cool:

    Apple, and we the Apple-appreciating community, need Steve Jobs at the helm.... I say that as a (very happy) shareholder, by the way!!

    peace,
    tribalogical
     
  22. macrumors 603

    Rocketman

    Joined:
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    Location:
    Claremont, CA
    #22
    They did an internal investigation, restated some items, turned it ALL over to the SEC on hopes full cooperation and internal correction would do the trick. Remember well, the issue they are rooting out is one which was common practice before, was endorsed by the accounting firms, and was thus and therefore felt safe by management. Recent rule changes "clarified" the practice as being non-compliant and was written in such a way firms had to go "back in time" to comply. That is usually not allowed in law. It was here.

    The SEC should make interim findings of folks they have "cleared" or something to indicate any company they are investigating has a "narrow scope" of inquiry.

    It's not just Apple.

    Rocketman
     
  23. macrumors member

    Joined:
    Mar 13, 2002
    #23
    While much of this is true, these are disclaimers, what I find most disturbing is that this is listed FIRST in the list of Risk Factors. It is required that these Risk Factors be listed in decending order of likelyhood and/or severity. If Apple could have buried this risk factor down the list they would have. Its placement indicated that Apple management has assesed that this is the number one risk factor the company faces.
     
  24. macrumors 6502

    Joined:
    Aug 7, 2006
    #24
    I can't tell you how hard this made me laugh. Heck of a retort, sir. I give you props.

    -Evan
     
  25. macrumors 6502a

    Peel

    Joined:
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    Location:
    Seattle
    #25
    No, it's not. And a negative finding by the SEC could send a shockwave through the entire high tech sector, as well as the entire stock market in general. Any company that followed the previously believed to be OK practice of granting options in this manner, will be sent scrambling to prevent a share devaluation across the board.
     

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