Apple Releases Financial Results, Discusses Options Scandal

Today's Page 1 headline in the Mercury News...

http://www.mercurynews.com/mld/mercurynews/16380949.htm

STOCK OPTIONS SCANDAL

Suit turns up heat on Apple

SHAREHOLDER ACTION CITES SUSPICIOUS GRANT DATES AT APPLE AND PIXAR

By Scott Duke Harris
Mercury News

A civil lawsuit containing new assertions about Apple Computer's stock options practices is putting the fabled company and Chief Executive Steve Jobs under more intense scrutiny.

The lawsuit claims that Apple improperly made grants to three senior executives in August 1997, a day before the company announced a major investment from Microsoft that boosted Apple's stock.

Additionally, it says Jobs netted $300 million in profit by selling Apple shares on March 19, ``just one day'' after the Wall Street Journal reported widespread backdating on options in corporate America.

The suit also says Apple's options irregularities coincided with suspicious grants at Pixar, the animation studio where Jobs was the biggest shareholder and which Disney acquired last year.

...

``This is no longer a case in which the defense says, `We didn't understand the accounting implications.' It's now a coverup case, and the backdating was more widespread than we initially thought,'' said Mark Molumphy, an attorney with the Burlingame firm Cotchett Pitre Simon & McCarthy, the lead counsel on the Dec. 18 lawsuit.
...
 
Apple iWash

http://money.cnn.com/blogs/legalpad/2007/01/apple-iwash-steve-jobss-premature.html

legal_pad_banner.gif



Tuesday, January 02, 2007

The Apple iWash: Steve Jobs's premature exoneration

Apple's SEC filing last Friday disclosing the outcome of its internal probe into options backdating is masterfully, tantalizingly opaque. Though entitled "explanatory note," the 20-paragraph document contains precious little explanation. It recounts that certain events did, indeed, occur at Apple, but sheds almost no light on how or why.

Investors greeted the announcement with glee--Apple's stock rose 4.9%--but I can't imagine why.
....​


CNN also has a story about the shareholder lawsuit:

 
Well, I've had enough of this. I've just ditched all my AAPL stock. Greedy ****ers. :mad:

Edit: Ooops! :eek:
 
Today Jim Cramer mentioned that this entire issue amounts to about 1 cent on earnings per share - insignificant. I continue to hold my Apple stock position with fingers crossed. Cramer (mad money) rated Apple as his #2 pick for 2007 growth stock.

$85.66 close today - up $1.86. Apple stock has had resistance beyond around $90.00 - current projections are all positive - $110, five star, product pipeline, vertical integration on music - video on the way. Some run up is expected with MWSF next week.
 
Apple Corps said:
Today Jim Cramer mentioned that this entire issue amounts to about 1 cent on earnings per share - insignificant. I continue to hold my Apple stock position with fingers crossed. Cramer (mad money) rated Apple as his #2 pick for 2007 growth stock.

$85.66 close today - up $1.86. Apple stock has had resistance beyond around $90.00 - current projections are all positive - $110, five star, product pipeline, vertical integration on music - video on the way. Some run up is expected with MWSF next week.
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couldn't agree more. buy aapl if you need a growth stock. and if you were thinking of selling, don't dare do it until after mwsf where the analyst reports will be hyping the stock after something cool drops.
 
skunk said:
Well, I've had enough of this. I've just ditched all my AAPL stock. Greedy ****ers. :mad:
Click to expand...

Busted. ;)

Truly, as a stockholder I expect them to be greedy -- on our behalf. But one thing we can count upon is that board members and execs at large corporations are looking after themselves first and foremost, and us later on, if they think of it, which they usually don't. For the first time in many years now, I'm strongly considering selling into strength. The drip, drip, drip is driving me nuts.
 
cynerjist said:
couldn't agree more. buy aapl. and if you were thinking of selling, don't dare do it until after mwsf where the analyst reports will be bumping up the stock after something cool drops.
Click to expand...

This is by no means the typical pattern. More often than not, AAPL goes down during and after MWSF. Take it from somebody who's been with this stock for a long, long time: MWSF will probably not make you a happy AAPL stockholder. If this is the kind of ride you're seeking, invest in something else.
 
IJ Reilly said:
This is by no means the typical pattern. More often than not, AAPL goes down during and after MWSF.
Click to expand...
It's the "hype factor".

There are so many hyped up rumours that turn out to be false, that the Street ends up being disappointed.

That, and the Street (and many of us) is(are) sometimes clueless about the real significance of tech events.

For example:

The Cube: huge buzz at first, now generally considered a failure
The Ipod: "meh" at first, now most people don't realize that the "Ipod company also makes computers"
 
Business Week: Is Steve Jobs Untouchable?

http://yahoo.businessweek.com/technology/content/jan2007/tc20070104_659422.htm

Is Steve Jobs Untouchable?

An internal inquiry gives him a pass in Apple's backdating scandal—but raises questions about whether he's getting special treatment
by Peter Burrows

In Silicon Valley, Steve Jobs is admired for many things: his storybook resuscitation of Apple Computer (AAPL), his billion-dollar-plus fortune, his rock star status as the driving force behind iconic products such as the iPod. Near the top of the list is Jobs’s famed ability to spin what admiring techies refer to as a "reality distortion field" to win consumers over to the Apple view of the world.

But will it work with government regulators? As Jobs prepares to wow the masses once again with his keynote at the annual Macworld trade show on Jan. 9, skepticism abounds among options experts, as well as techies, that the Apple chief executive is totally in the clear over his role in resetting start dates for company stock options.​
 
AidenShaw said:
It's the "hype factor".

There are so many hyped up rumours that turn out to be false, that the Street ends up being disappointed.

That, and the Street (and many of us) is(are) sometimes clueless about the real significance of tech events.

For example:

The Cube: huge buzz at first, now generally considered a failure
The Ipod: "meh" at first, now most people don't realize that the "Ipod company also makes computers"
Click to expand...

In part, yes -- but I've seen many instance of Apple announcing the very products they were expected to announce, and even products they nobody expected, and watching the stock fall significantly on keynote day. Even in 2006, when the stock took a big jump up during MWSF week, for no particular reason I could see, it had turned down very substantially by the end of January. Both of these moves came long before anybody knew whether the products announced that month would actually sell.

I blame this partly on Apple, for making the markets breathe rumor fumes. Apple might release a mobile phone -- AAPL up 10 percent! Apple might not release a mobile phone -- AAPL down 10 percent! All this before anybody knows what the product will be, or even if there will be a product, let alone whether it will sell. It'll be interesting to see how the markets react to the iTV, given that Apple has already said it's coming. If that product doesn't make its debut next week, with a ship-date within weeks, then watch out below!
 
Apple is giving Jobs a free pass, critics say

Another Page 1 story in the Mercury News today.

http://www.mercurynews.com/mld/mercurynews/business/16389487.htm

Apple is giving Jobs a free pass, critics say

`TRYING TO PRESERVE COMPANY'S NO. 1 ASSET'

By Mark Schwanhausser and Troy Wolverton


While Apple Computer's board last week gave Chief Executive Steve Jobs a vote of ``complete confidence'' in an investigation of manipulated stock options, critics are questioning whether the company's directors are letting Jobs off too easily because of his value to the company.

``I think Apple's board has tried to preserve the company's No. 1 asset: Steve Jobs,'' said James Post, a Boston University management professor who specializes in corporate governance. ``But there is a lot of evidence that he knew about -- and approved -- the backdating practices and related accounting issues.''

The Cupertino computer giant disclosed last Friday that its investigation concluded that Jobs not only had received tainted grants but also recommended ``favorable'' grant dates to Apple executives. Previously, the company had said Jobs had only been ``aware'' of the abuses.

``Apple's board deserves an `F' for how it has handled its backdating investigation,'' said Lynn Turner, managing director of research at Glass Lewis, a firm that advises investors on corporate governance and accounting issues.
...
​
 
Apple Quietly Canned Lawyer Who Backdated

http://www.law.com/jsp/article.jsp?id=1167991339566

Apple Quietly Canned Lawyer Who Backdated

Justin Scheck
The Recorder
January 8, 2007


Steve Jobs is an ideas guy. He wears jeans, grows beards and orates to cheering throngs at events like this week's MacWorld conference.

Jobs' biographers say evidence indicates that he's a pescetarian. He went to India. He takes only $1 a year in salary. And he leaves it up to other people to award him hugely valuable piles of stock in Apple Computer, where he's the CEO.

People like Wendy Howell, the former in-house Apple lawyer responsible for option paperwork, probably won't be attending Jobs' eagerly awaited MacWorld speech Tuesday. Late last year, she became the lone person to lose her job as a result of the company's well-publicized options problems.

Howell's name hasn't been publicly mentioned in the Apple options mess, and her firing wasn't disclosed by the company in its series of public disclosures of options problems.

But she was the person who filled out the paperwork on a 2001 option award to Jobs that has grown infamous since just after Christmas, when Apple acknowledged that the value of the grant was artificially pumped up via a set of fabricated meeting minutes.​
 
cynerjist said:
like many i certainly made money on this. i placed a limit order for just under 80 bucks per share.
Click to expand...

cynerjist said:
if you were thinking of selling, don't dare do it until after mwsf where the analyst reports will be hyping the stock after something cool drops.
Click to expand...

IJ Reilly said:
MWSF will probably not make you a happy AAPL stockholder. If this is the kind of ride you're seeking, invest in something else.
Click to expand...

cynerjist said:
you seem pretty negative about apple stock. i think you just like arguing.
we can only wait and see. :)
Click to expand...

IJ Reilly said:
No, just experienced, and I don't mind sharing.
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buh-buh-buh-booo-yaaaah IJ Reilly.

i can't wait to hear you spin this into something that somehow makes you right or more knowledgeable than me.
 
cynerjist said:
buh-buh-buh-booo-yaaaah IJ Reilly.

i can't wait to hear you spin this into something that somehow makes you right or more knowledgeable than me.
Click to expand...

And the winner of the big Whatever Prize for today is...

No spin necessary. I am happy to be wrong, but as someone who invests for more than a day at a time, I will also be watching for the next few days and weeks. I think we remember what happened last year. We do, don't we?

The point I made hasn't changed in any event.
 
IJ Reilly said:
And the winner of the big Whatever Prize for today is...

No spin necessary. I am happy to be wrong, but as someone who invests for more than a day at a time, I will also be watching for the next few days and weeks. I think we remember what happened last year. We do, don't we?

The point I made hasn't changed in any event.
Click to expand...

i mentioned it as a growth stock which implies i'm not a day trader. but anyway, i'm happy for all the shareholders, even the condescending ones.

it's been fun sparring with you, but i think the last guy broke the stick off and i've given up yanking at it. happy trails.
 
cynerjist said:
i mentioned it as a growth stock which implies i'm not a day trader. but anyway, i'm happy for all the shareholders, even the condescending ones.

it's been fun sparring with you, but i think the last guy broke the stick off and i've given up yanking at it. happy trails.
Click to expand...

In fact, you seemed to be assuring a novice investor that AAPL would go up today. I don't let anyone get away with a statement like that without signing their name to the guarantee, if only because we know it's far from always true.
 
U.S. attorney opens probe into Apple options rigging

http://www.mercurynews.com/mld/mercurynews/16452862.htm

U.S. attorney opens probe into Apple options rigging

By Troy Wolverton, Therese Poletti and Mark Schwanhausser
Mercury News

The U.S. Attorney's Office said late Friday that it has opened a criminal investigation into the stock options backdating scandal at Apple.

Luke Macauley, a spokesman for the U.S. Attorney's Office in San Francisco, declined to give details on the investigation. But a source familiar with the matter told the Mercury News on Friday that included in the probe is an option grant given to Apple Chief Executive Steve Jobs in 2001 that ranked among the largest in corporate history.

...

Apple has argued that Jobs did not benefit from any backdated options because the company canceled both the 2000 and 2001 grants. However, Apple replaced the grants with 7.5 million shares of restricted stock, of which Jobs still holds about 5.4 million shares currently worth about $511 million.

Apple described the trade at the time as an ``exchange.''

`` `In exchange for:' Those three words are pregnant with meaning,'' said compensation expert Graef Crystal. ``For them to make the statement that he surrendered the options and never received a benefit is so duplicitous, so mendacious, that everything they have to say is colored, in my mind.''

Patrick S. McGurn, director of Institutional Shareholder Services in Rockville, Md., on Friday called for Jobs to disgorge $20 million -- the amount of the accounting charge Apple took for the 2001 grant.

``It really is cruel and unusual punishment for the English language to try to come up with language that would indicate that he did not benefit from the award he received,'' said McGurn. ``Clearly, those awards were ultimately exchanged on a roughly value-for-value basis.''​

...and this is in Apple's hometown newspaper...which usually prints stories gushing about how wonderful every Apple announcement is...
 
Other stories about the federal investigation

From MacSurfer's Headline News™

  • "Attorneys are focus of Apple probe: Regulators reportedly want to ask 2 lawyers about options" San Francisco Chronicle
  • "U.S. attorney opens probe into Apple options rigging" San Jose Mercury News
  • "Timing of Jobs' Bite of Apple Comes Under Scrutiny: Federal investigators examine whether CEO's stock options grant broke the law." Associated Press
  • "U.S. Investigates Options Grant To Apple CEO: Report" Reuters
  • "Apple still under investigation" New York Daily News
  • "Nice Phone, Mr. Jobs, But ...: Steve Jobs may have a golden gut when it comes to cool tech products. But when it comes to dealing with regulators, it looks as if he and his company have a tin ear." New York Times
 
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