NASDAQ notifies Apple of non-compliance
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.
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.
Comments
what does this mean for shareholders and AAPL's value?
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.
When Apple goes under ALA enron, Finalcut and OSX will be open source!
<ducks>
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!
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.?
Do you have Shawn Wu's Mobile No.?
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.
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.
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.
just kidding. this is bad. heh.
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.
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"
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.
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."
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.
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.