Apple shares fall 5 percent on latest options scare
Shares of iPod maker Apple Computer fell more than 5 percent Wednesday morning following a report that federal prosecutors are examining potentially falsified stock-option documents to determine whether to file criminal charges.
Apple shares sunk as low $76.77, down from Tuesday's closing price of $81.51, after a report by The Recorder published on Law.com cited "individuals familiar with the case" as saying the U.S. attorney's office has shown "great interest" in the Cupertino, Calif.-based company's stock-options dealings.
The report, covered by AppleInsider on Tuesday evening, alleged that company officials forged administration documents to maximize the profitability of stock-option grants to its executives.
Apple in an October statement said its investigation into the matter "raised serious concerns regarding the actions of two former officers in connection with the accounting, recording and reporting of stock option grants."
The Recorder cited people familiar with the matter in disclosing that those two ex-officers are Nancy Heinen and Fred Anderson, the company's former general counsel and chief financial officer, respectively.
But weighing most heavily on Apple shares are concerns over chief executive Steve Jobs, who, according to the publication, has hired outside counsel separate from Apple's lawyers to deal with the SEC and Justice Department.
Until recently, Jobs had been represented by the the company's outside law firm, O'Melveny & Myers. Apple had previously stated that its own internal probe into the matter turned up no misconduct by Jobs or other current company officials.
Apple shares sunk as low $76.77, down from Tuesday's closing price of $81.51, after a report by The Recorder published on Law.com cited "individuals familiar with the case" as saying the U.S. attorney's office has shown "great interest" in the Cupertino, Calif.-based company's stock-options dealings.
The report, covered by AppleInsider on Tuesday evening, alleged that company officials forged administration documents to maximize the profitability of stock-option grants to its executives.
Apple in an October statement said its investigation into the matter "raised serious concerns regarding the actions of two former officers in connection with the accounting, recording and reporting of stock option grants."
The Recorder cited people familiar with the matter in disclosing that those two ex-officers are Nancy Heinen and Fred Anderson, the company's former general counsel and chief financial officer, respectively.
But weighing most heavily on Apple shares are concerns over chief executive Steve Jobs, who, according to the publication, has hired outside counsel separate from Apple's lawyers to deal with the SEC and Justice Department.
Until recently, Jobs had been represented by the the company's outside law firm, O'Melveny & Myers. Apple had previously stated that its own internal probe into the matter turned up no misconduct by Jobs or other current company officials.
Comments
The fundamentals are still there and Jobs will most likely get a slap on the wrist.
Fred and Nancy are the ones who should have known better.
Steve is a genius not an accountant or a lawyer.
buying opportunity.
The fundamentals are still there and Jobs will most likely get a slap on the wrist.
Fred and Nancy are the ones who should have known better.
Steve is genius not an accountant or a lawyer.
Give me a break: This sounds like the type of defense that a Jeff Skilling might adopt. The options backdating scandal is corporate America at its worst. There is no way to put lipstick on this pig. Read, for instance, today's cover story in the WSJ about options abuse and you'll see what I mean (for those with a subscription, it is here: http://online.wsj.com/article/SB1167...whats_news_us).
Let's face it: This is a shameful episode in an otherwise inspiring corporate career (reminds me of when the great Jack Welch was humbled by his getting GE to pay for things such as basketball tickets and flowers despite his retirement payout in the hundreds of millions).
Steve Jobs should swallow hard, perform a public mea culpa, give the (backdated) options back to the company -- or even better, to charity -- and move on. He is better off hiring a solid PR firm than a lawyer, and getting his face in the media. (He could also do what Welch did: write an apologetic op-ed piece in the WSJ).
He owes it to his stockholders, who are otherwise going to face a lot of stock price volatility.
Steve is genius not an accountant or a lawyer.
Give me a break: This sounds like the type of defense that a Jeff Skilling might adopt. The options backdating scandal is corporate America at its worst. There is no way to put lipstick on this pig. Read, for instance, today's cover story in the WSJ about options abuse and you'll see what I mean (for those with a subscription, it is here: http://online.wsj.com/article/SB1167...whats_news_us).
Let's face it: This is a shameful episode in an otherwise inspiring corporate career (reminds me of when the great Jack Welch was humbled by his getting GE to pay for things such as basketball tickets and flowers despite his retirement payout in the hundreds of millions).
Steve Jobs should swallow hard, perform a public mea culpa, give the (backdated) options back to the company -- or even better, to charity -- and move on. He is better off hiring a solid PR firm than a lawyer, and getting his face in the media. (He could also do what Welch did: write an apologetic op-ed piece in the WSJ).
He owes it to his stockholders, who are otherwise going to face a lot of stock price volatility.
I agree. This might, repeat might, have been able to be swept under the rug 10 or 20 years ago not in 2005.
WallStreet is a bunch of, can I say it, pussies.
It makes you sound like another mindless Apple apologist, but go ahead.
It makes you sound like another mindless Apple apologist, but go ahead.
No, not at all. It's an observation that in general WallStreet always reacts to things just like when a schoolgirl sees a spider. Maybe I don't understand the Street that much but some of their reactions make me think, "you gotta be kidding me, get some balls, don't go crying mommy when the wind blows hard".
Edit: Let me say this. It's like WallStreet lives in fear. Which personally, drives me nuts.
No, not at all. It's an observation that in general WallStreet always reacts to things just like when a schoolgirl sees a spider. Maybe I don't understand the Street that much but some of their reactions make me think, "you gotta be kidding me, get some balls, don't go crying mommy when the wind blows hard".
Edit: Let me say this. It's like WallStreet lives in fear. Which personally, drives me nuts.
Wall Street is not as stupid/silly as you think.
I hate to sound schoolgirl-ish in my metaphors, but a spider is usually a sign that there are cobwebs; cobwebs a sign that there are insects; insects, often a larger sign that the cleanliness of the house leaves something to be desired (i.e., there might be other dirt).
Given the natural information asymmetry between insiders (AAPL management and board) and outsiders (Wall Street), this is exactly the kind of reaction one should expect. Which is why it is crucial for Steve Jobs to get in front of this one pronto.
His normal cute-sy penchant for secrecy ain't going to cut it on this one, I am afraid.
No, not at all. It's an observation that in general WallStreet always reacts to things just like when a schoolgirl sees a spider. Maybe I don't understand the Street that much but some of their reactions make me think, "you gotta be kidding me, get some balls, don't go crying mommy when the wind blows hard".
Edit: Let me say this. It's like WallStreet lives in fear. Which personally, drives me nuts.
What does this analogy even mean?
Who is the "little girl" in your analogy? Wall Street? They're not initiating anything -- it's federal prosecutors.
What is "the wind"? Insider trading?
Who should be "growing balls"?
Do you even know what you mean?
This story is old and it will not change the fact that they are selling millions of iPods and computers. Apple is increasing market share and the stock will reflect that once the data is confirmed.
Please repost the story sometime back when Wu said that Apple will be down in the 70's in Dec. Everyone called him a fool including myself. Wall Street manipulated this stock big time in the last 10 days. They all sold at 93 and then bought options at 77 or 78 and made a killing shorting the stock by selling. Now they are buying at 76 and watch this stock go up over 100 come Jan.
This story is old and it will not change the fact that they are selling millions of iPods and computers. Apple is increasing market share and the stock will reflect that once the data is confirmed.
Oh yes, and Steve Jobs must be on this too with Wu et. al, by switching lawyers, etc on cue before the end of Dec., so as to make the short sellers rich.
Man, this is amazing naivete!!!!!!
Steve Jobs should swallow hard, perform a public mea culpa, give the (backdated) options back to the company -- or even better, to charity -- and move on. He is better off hiring a solid PR firm than a lawyer, and getting his face in the media. (He could also do what Welch did: write an apologetic op-ed piece in the WSJ).
He owes it to his stockholders, who are otherwise going to face a lot of stock price volatility.
Well, actually, that has sort of already happened, so do not go down on this so hard before you get your facts straight.
Jobs did not benefit from any of these stock options backdating. Or rather, he did receive some options year back, but returned them and he has never benefitted from these accounting regulariies.
Jobs has issued an apology to the stockholders.
So. before you judge, be careful.
I agree. This might, repeat might, have been able to be swept under the rug 10 or 20 years ago not in 2005.
That's really too bad. This is another witch hunt by the securities regulators. Isn't their job supposed to be to protect shareholders? Now they have caused a 5% slide in Apple's share price. How does that help shareholders? Will it be good for shareholders if Jobs is convicted and banned from sitting on the board of directors? I don't think so.
Share trading should be the biggest bastion of free enterprise, instead, it is the most heavily regulated market in the western world. Don't kid yourself, its not helping anyone but the regulators who are looking to make a name for themselves, and maybe earn some bonuses for bringing down big names.
Please repost the story sometime back when Wu said that Apple will be down in the 70's in Dec. Everyone called him a fool including myself. Wall Street manipulated this stock big time in the last 10 days. They all sold at 93 and then bought options at 77 or 78 and made a killing shorting the stock by selling. Now they are buying at 76 and watch this stock go up over 100 come Jan.
This story is old and it will not change the fact that they are selling millions of iPods and computers. Apple is increasing market share and the stock will reflect that once the data is confirmed.
Quick, Gentlemen!.....
To the Wu-Mobile!
Well, actually, that has sort of already happened, so do not go down on this so hard before you get your facts straight.
Jobs did not benefit from any of these stock options backdating. Or rather, he did receive some options year back, but returned them and he has never benefitted from these accounting regulariies.
Jobs has issued an apology to the stockholders.
So. before you judge, be careful.
Oh, really? "Never benefitted?" Why don't you take a look at the story that appeared a week later in the same publication:
http://www.macnn.com/articles/06/10/...give.back.85m/
Perhaps you know more about this? If so, I would love to know your source.
And, the by the way, the story you cited is headlined "Jobs knew; apologizes" (An earlier post seemed to imply that Jobs had no knowldege, and that it was just the corporate lawyer and the CFO).
The point is, a lot of CEOs of tech companies were doing this; AAPL is by no means alone. A proforma apology that sounds like it was put out by the company's PR department (and assertions such as "Jobs never benefitted") are not enough. Apple and Jobs are better than that.
Oh, really? "Never benefitted?" Why don't you take a look at the story that appeared a week later in the same publication:
http://www.macnn.com/articles/06/10/...give.back.85m/
Perhaps you know more about this? If so, I would love to know your source.
And, the by the way, the story you cited is headlined "Jobs knew; apologizes" (An earlier post seemed to imply that Jobs had no knowldege, and that it was just the corporate lawyer and the CFO).
The point is, a lot of CEOs of tech companies were doing this; AAPL is by no means alone. A proforma apology that sounds like it was put out by the company's PR department (and assertions such as "Jobs never benefitted") are not enough. Apple and Jobs are better than that.
The source of those allegations is some unnamed columnist, hardly awe inspiring. Also, Jobs may have benefited from options backdating WHICH IS NOT ILLEGAL, just that it has to be properly accounted for in the quarterly report to the shareholders, and that is the CFO's responsibility, not the CEO's.
That's really too bad. This is another witch hunt by the securities regulators. Isn't their job supposed to be to protect shareholders? Now they have caused a 5% slide in Apple's share price. How does that help shareholders? Will it be good for shareholders if Jobs is convicted and banned from sitting on the board of directors? I don't think so.
Share trading should be the biggest bastion of free enterprise, instead, it is the most heavily regulated market in the western world. Don't kid yourself, its not helping anyone but the regulators who are looking to make a name for themselves, and maybe earn some bonuses for bringing down big names.
You're kidding, right?
I also suppose you also feel their investigation into Enron worked out terribly for shareholders as well...
You're kidding, right?
I also suppose you also feel their investigation into Enron worked out terribly for shareholders as well...
You think that this is helping Apple? Do you think going after Martha Stewart helped her company?