NASDAQ notifies Apple of non-compliance

Posted:
in General Discussion edited January 2014
The NASDAQ Stock Market on Friday sent a letter to Apple Computer, notifying the company that it is not in compliance with the filing requirements for continued listing on the index.



The letter was issued in accordance with NASDAQ procedures due to the delayed filing of the Apple's Form 10-Q for the quarter ended July 1, 2006.



Apple has requested a hearing before the NASDAQ Listing Qualifications Panel. Pending a decision by the panel, its shares will remain listed on the NASDAQ.



On June 29, 2006, an internal Apple investigation discovered irregularities related to the issuance of certain stock option grants made by the company between 1997 and 2001.



Several weeks later, the company announced that it had discovered additional irregularities and therefore would have to delay the filing of its Form 10-Q for the quarter ended July 1, 2006.



Apple has also said that it will likely need to restate its historical financial statements to record non-cash charges for compensation expense relating to past stock option grants.
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Comments

  • Reply 1 of 23
    I'm sad now.
  • Reply 2 of 23
    crees!crees! Posts: 501member
    So if Apple did get pulled from the market what happens to your shares?
  • Reply 3 of 23
    awalawal Posts: 66member
    ummmm?



    what does this mean for shareholders and AAPL's value?
  • Reply 4 of 23
    I doubt if Apple will be pulled. Apple discovered the problem and reported it - being proactive means a lot. They have also hired independent experts to resolve the issues ASAP in order to restate historic financial statements.



    Shares may drop a bit for a while if people holding shares are worried about history. Those that are focused on the present and the future will keep the shares they have, or buy more when the stock goes down.



    In looking at the future, moving all Macs to Core 2 in the very near future and the release of new iPods will be seem by most as more important than history. Shares should rebound, especially if Apple is selling every new iPod it can make.
  • Reply 5 of 23
    a_greera_greer Posts: 4,594member
    Look at the bright side:



    When Apple goes under ALA enron, Finalcut and OSX will be open source!



    <ducks>
  • Reply 6 of 23
    meelashmeelash Posts: 1,045member
    This is just a formality and nothing to get panicky about. When Apple announced that they would have to delay their filings, it was to be expected that they would get this notice. Now, they simply file something with NASDAQ informing them of the reason for the delay and seeking extension and business goes on as usual.
  • Reply 7 of 23
    Quote:
    Originally Posted by a_greer


    Look at the bright side:



    When Apple goes under ALA enron, Finalcut and OSX will be open source!



    <ducks>



    Brilliant!



    oopps I got shares as well... DOH!
  • Reply 8 of 23
    bdj21yabdj21ya Posts: 297member
    The interesting thing to me is how little AAPL has been affected by all of this uncertainty. There have been a couple of small drops, but Apple has counteracted it with other good news and a great track record. It almost seems like investors are relying on faith to hold on to these shares. I wish we could get some kind of estimate about how much historical financial statements will need restating and how much it is expected to affect the stock. It's a pain, because I have no info on what other investors are expecting the restatement to be like, so I don't know if they're underestimating the effect of this or if it's already been incorporated into the current price. Any ideas?
  • Reply 9 of 23
    Quote:
    Originally Posted by bdj21ya


    The interesting thing to me is how little AAPL has been affected by all of this uncertainty. There have been a couple of small drops, but Apple has counteracted it with other good news and a great track record. It almost seems like investors are relying on faith to hold on to these shares. I wish we could get some kind of estimate about how much historical financial statements will need restating and how much it is expected to affect the stock. It's a pain, because I have no info on what other investors are expecting the restatement to be like, so I don't know if they're underestimating the effect of this or if it's already been incorporated into the current price. Any ideas?



    Do you have Shawn Wu's Mobile No.?
  • Reply 10 of 23
    bdj21yabdj21ya Posts: 297member
    Quote:
    Originally Posted by OfficerDigby


    Do you have Shawn Wu's Mobile No.?



    Good one! Unfortunately no, but I'm sure he could tell me just what to do...right after I should have done it.
  • Reply 11 of 23
    e1618978e1618978 Posts: 6,073member
    Quote:
    Originally Posted by crees!


    So if Apple did get pulled from the market what happens to your shares?



    You would still own the shares, and the company would continue as always, you would just have a harder time buying and selling shares (via pink sheets).



    Don't worry, Nortel deserved to be delisted a lot worse than Apple has ever deserved it, and they are still trading.
  • Reply 12 of 23
    Time to short Apple stock



    Obviously Apple is going to have to report a decrease in net earnings, b/c of these non-cash expenses - but who knows how much this will amount to.



    I am a skeptic when it comes to non-cash expenses - it's basically an accounting decision, not a decision that has an immediate effect on cash flow. The executives who received the options may not exercise them for years, so there will be no immediately realizable decrease in Apple's earnings... but with the way GAAP is written, and with SEC rules, you have to book some, or most the cost of the options (for the most part, with some exceptions) at the time they were issued.
  • Reply 13 of 23
    e1618978e1618978 Posts: 6,073member
    Quote:
    Originally Posted by Sybersport


    Time to short Apple stock



    Obviously Apple is going to have to report a decrease in net earnings, b/c of these non-cash expenses - but who knows how much this will amount to.



    I am a skeptic when it comes to non-cash expenses - it's basically an accounting decision, not a decision that has an immediate effect on cash flow. The executives who received the options may not exercise them for years, so there will be no immediately realizable decrease in Apple's earnings... but with the way GAAP is written, and with SEC rules, you have to book some, or most the cost of the options (for the most part, with some exceptions) at the time they were issued.



    Shorting apple stock at this point would be very hazardous, IMHO. The stock is valued pretty conservatively based on earning growth being greater than P/E, and based on no debt and a pile of cash. Combine that with the huge upside should apple produce an iPhone or some other great product, and you have a world of shorting hurt.
  • Reply 14 of 23
    why does apple wanna be on NASDAQ when they can be on.... NASCAR!



    just kidding. this is bad. heh.
  • Reply 15 of 23
    melgrossmelgross Posts: 31,323member
    Quote:
    Originally Posted by monkeyastronaut


    why does apple wanna be on NASDAQ when they can be on.... NASCAR!



    just kidding. this is bad. heh.



    It's only bad if Apple did something criminal. We don't know that .



    If they backdated legally, but then didn't file the proper tax returns, it's a civil matter. They will have to rectify the situation, pay the back taxes, and perhaps pay a fine. If it can be shown that there was fraud involved that rose to a criminal level, then those executives can be prosecuted for that.



    By the way, Pixar may also have problems.
  • Reply 16 of 23
    meelashmeelash Posts: 1,045member
    Quote:
    Originally Posted by melgross


    It's only bad if Apple did something criminal. We don't know that .



    If they backdated legally, but then didn't file the proper tax returns, it's a civil matter. They will have to rectify the situation, pay the back taxes, and perhaps pay a fine. If it can be shown that there was fraud involved that rose to a criminal level, then those executives can be prosecuted for that.



    By the way, Pixar may also have problems.



    In fact there are a LOT of companies in this same situation right now. My hunch is that this kind of thing was probably understood to be acceptable at the time and "everybody" did it. Now it's suddenly become a Bad Thing so everyone's scrambling to "say sorry and make up"
  • Reply 17 of 23
    melgrossmelgross Posts: 31,323member
    Quote:
    Originally Posted by meelash


    In fact there are a LOT of companies in this same situation right now. My hunch is that this kind of thing was probably understood to be acceptable at the time and "everybody" did it. Now it's suddenly become a Bad Thing so everyone's scrambling to "say sorry and make up"



    Again, it depends on exactly what was done. Executives are going to jail because of it. Surely, you have read about that.
  • Reply 18 of 23
    meelashmeelash Posts: 1,045member
    Quote:
    Originally Posted by melgross


    Again, it depends on exactly what was done. Executives are going to jail because of it. Surely, you have read about that.



    Yeah, I think that's a big part of the cause for all the scrambling. Suddenly, it's considered very serious so companies are rushing to clean up and distance themselves from the "bad guys."
  • Reply 19 of 23
    hirohiro Posts: 2,663member
    Quote:
    Originally Posted by melgross


    Again, it depends on exactly what was done. Executives are going to jail because of it. Surely, you have read about that.



    To be more precise, executives are going to jail for concealing backdating and trying to adjust the accounting books to avoid paying corporate taxes. Backdating itself was not illegal if it was done transparently and taxes properly filed. Whether it is considered ethical is a separate matter from the legal aspects.
  • Reply 20 of 23
    melgrossmelgross Posts: 31,323member
    Quote:
    Originally Posted by Hiro


    To be more precise, executives are going to jail for concealing backdating and trying to adjust the accounting books to avoid paying corporate taxes. Backdating itself was not illegal if it was done transparently and taxes properly filed. Whether it is considered ethical is a separate matter from the legal aspects.



    Right, that's why I said that we don't know what was done.
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