Apple Announces More Options Troubles 159
fremen writes "Apple today announced that they will be withdrawing their financial reports back to September 29, 2002 and delaying the filing of future reports after finding more backdated options problems. Companies backdate their stock options by looking back over a period of time and choosing a historical low as the option strike price. While not illegal, this must be fully disclosed to investors and properly accounted. Expect more uncertainty in the coming weeks as regulators must now uncover how much of Apple's record profits were incorrect as well as whether or not Steve Jobs will be able to continue leading the company."
Steve Jobs leading Apple (Score:2, Interesting)
I mean, if he has leave, he's just going to come up with something bright and new (not "NeXT" this time, I vote for "TheOneAfter"), which is then going to be bought by Apple after a few years... :-)
Re:Steve Jobs leading Apple (Score:3, Interesting)
His milking of the Mac for all its worth. Then he'll have to move on to the next big thing.
Re:Steve Jobs leading Apple (Score:3, Interesting)
-Tony
Re:Steve Jobs leading Apple (Score:2, Informative)
Re:Steve Jobs leading Apple (Score:3, Funny)
I'm glad you asked that question, Comrade deekline+wizard. We, the masses, must overthrow capatalists such as Jobs in a violent revolution, so that the means of production will be in the hands of the workers.
Re:Steve Jobs leading Apple (Score:1, Insightful)
Re:Steve Jobs leading Apple (Score:2, Redundant)
Re:Steve Jobs leading Apple (Score:3, Insightful)
Re:Steve Jobs leading Apple (Score:4, Informative)
For financial stuff public companies have CFOs - chief financial officer. It's not responsibility of CEO to overview SEC reports - it's responsibility of CFO.
In other words, I beleive Peter Oppenheimer (?, if Google's not lying) as current Apple CFO has more to lose.
Re:Steve Jobs leading Apple (Score:4, Insightful)
Re:Steve Jobs leading Apple (Score:1)
Re:Steve Jobs leading Apple (Score:3, Informative)
Re:Steve Jobs leading Apple (Score:3, Informative)
That is not true. Any securities traded in the US fall under their jurisdiction. They just tend to be more interested in companies that are, or are going, public.
Re:Steve Jobs leading Apple (Score:5, Informative)
Re:Steve Jobs leading Apple (Score:2)
Re:Steve Jobs leading Apple (Score:2)
N.b. that I'm not a securities lawyer, I just know enough to have a broad idea of what goes in certain transactions so that I can stay in the loop.
Re:Steve Jobs leading Apple (Score:2)
Re:Steve Jobs leading Apple (Score:2)
Re:Steve Jobs leading Apple (Score:2)
Re:Steve Jobs leading Apple (Score:4, Insightful)
What could stop him in the long run?
The article insinuates that regulators can stop him. I doubt that's true. Unless the numbers are Enron-like, the board is very unlikely to dump him. My take on the article is that the overstatement of profits is significant, but not as significant as Steve Jobs leadership.
TW
Re:Steve Jobs leading Apple (Score:5, Insightful)
The regulators could stop him. But that's why Apple did the right thing and came forward about it, launched a third party investigation, and is trying to clear things up. The industry I work in sees something similar with export control violations. The governing agency is usually much lighter on penalties and such if you come forward about it. I imagine that the SEC operates in a similar manner. Getting audited and finding out Apple knew about it all along, but didn't do anything about it, would be far, far worse.
unlikely steve's going to be bounced out (Score:2)
Re:switch the company name (Score:2)
to Microsoft and I wonder what the comments would be?
Frankly, I don't give a fuck about Apple's past profits, nor their current share price. I hold no AAPL stock, so there's no reason for me to care.
But if the future of the company is in jeopardy, or if it's a possibility that they could lose Steve Jobs, then I do care, because I really like the products they've put out since Jobs came back to the company, and I would really like to see them continue as they have.
Switch the company n
Isn't this an issue for the CFO (Score:5, Insightful)
Michael
Re:Isn't this an issue for the CFO (Score:4, Informative)
Apple said in June that one of the stock option grants was to chief executive Steve Jobs, but it was subsequently canceled and resulted in no financial gain to Jobs.
So this is an issue for the CFO AND the CEO as well.
Re:Isn't this an issue for the CFO (Score:4, Informative)
Re:Isn't this an issue for the CFO (Score:1)
it does result in a benefit... the "absence of a loss" happening that's what... they're a bet that you can't lose.
With my company's employee share purchase scheme, I actually had to stump up money and buy them... I'm now sweating on our shares going back up above the offer price that I bought them at (that price was slightly lower than the current market price then but I have to hold them for a year first). These execs hav
Re:Isn't this an issue for the CFO (Score:2)
However, an option is in itself a type of security, so if you've been granted stock options, you could be liable for taxes on them, even if they're "underwater".
If your company has a mandatory stock purchase plan, I don't know, but it sounds illegal to force your employees to purchase the company stock.
Re:Isn't this an issue for the CFO (Score:2)
There's a difference between options and ESPP (Score:2)
Re:Isn't this an issue for the CFO (Score:5, Insightful)
As far as your question goes, it depends on the extent of the scandal at Apple. All indications are that this is not that big a deal. It's not Enron, it's not Worldcom, it's not Tycho, it's not Adelphia. It's going to hurt Apple a little bit now, but they seem to be taking their medicine rather than covering up. Apple is the one coming forward with the information, not a whistle blower.
Also, this isn't an isolated case, but part of a much wider phenomenon. A lot of companies in many industries have been engaging in this sleazy practice. A lot of them are coming clean. However, by the time the SEC actually does anything, this whole thing will be in the past for most companies (which is why the smart thing to do is to do your own internal investigation and come clean on your own).
The only way that upper management will really get bitten in the ass is by shareholder lawsuits that hold them personally liable. I'm not too worried on Jobs' behalf on that score.
At any rate, let's wait and see what the restatements are. Then we can see how much of a mountain or a molehill this will be.
Re:Isn't this an issue for the CFO (Score:1, Flamebait)
No, its not. There's plenty of speculation outside of
Hard thing to prove I guess, but this is certainl
Re:Isn't this an issue for the CFO (Score:4, Insightful)
You will grant me, my dear Whiney, that I never said that everyone does it. I said it was a widespread problem. The two are not mutually exclusive. I hope you're not trying any of your jedi agitprop tricks with me! They won't work! (Don't try to put words in my mouth and I promise I won't try to put my dick into your mouth.) =)
I never said this wasn't a serious matter. All I've said was that it was ridiculous to compare this to Enron or Worldcom.
Is this some fucked up shit? Yeah.
Is it some majorly fucked up shit? No.
Anyway, it's a sad day for Apple, but I've seen much sadder. Unless the news gets a whole lot worse, I don't even think this counts as much of a stumble. Please don't misunderstand me, though. I don't want to lessen your joy on this occasion one iota, so long as it's based on reality. So laugh at the stupid clowns at Apple that fucked up. Cross your fingers in hopes that it will get worse. Just don't jump the gun!
And as always, good to see you, hope your day is terrific, blah blah blah. =)
Re:Isn't this an issue for the CFO (Score:5, Insightful)
CEO Steve Jobs may be forced to resign if it is proved that he knowingly took an option grant at below market prices.
is completely false. There is nothing wrong with taking an option grant at below market prices, and that isn't the issue here at all; the issue is whether such things were reported properly. Jobs would only be at risk if it were shown that he intentionally deceived investors about the level of compensation he was getting.
My speculation? Most likely Jobs didn't determine the details of his compensation personally, and the person who did made a mistake. Options dating wasn't at the top of anyone's mind two years ago, and the impact on Apple's reported earnings is probably not much more than noise. Investors who sell now are being hasty as the situation is unlikely to change in any material way.
This WILL be a big deal at smaller companies where the options dating issue results in significant changes to the bottom line, but it's hard to imagine this being the case at Apple.
Aaarrg. Eyes bleeding... (Score:2)
There's no way you're going to get people to read your stuff if you don't use paragraphs, and break your points up into digestible pieces...
Just a friendly hint.
Simon
Who? (Score:5, Insightful)
Re:Who? (Score:1, Informative)
Re:Who? (Score:1)
Re:Who? (Score:3, Insightful)
But Apple still sold the same number of Macs and iPods as previously reported - *those* numbers will NOT change, and those numbers still reflect a growing business.
Re:Who? (Score:3, Insightful)
Remember, Enron was a sucessful company with a share price that was rising.
(This comment has nothing in particular to do with Apple, it's just an answer to the question asked)
Re:Who? (Score:2)
An organization such as... hmm... The SEC?
Re:Who? (Score:5, Insightful)
Care to support that statement, other than by citing a comparison to Enron? Anything that shows Apple's success is faked by cooking the books? Where is this "discrepency" in numbers, other than a figment of your imagination?
I think you don't understand the nature of this particular scandal. Yes, it's a scandal. But it's not in the least comparable to Enron. And it's emphatically not about discrepancies in iPod sales. It's about sleazy stock option practices.
Apple, Meet Orange (Score:2)
The iPod and iTMS are obviously cornerstones of Apple's current earnings, but the iPod simply requires that you use proprietary software to transfer music onto it--not uncommon for peripheral devices,
Re:Apple, Meet Orange (Score:4, Informative)
This is no longer the case. There are third party and Free applications for the iPod now. Check out rockbox [rockbox.org] for iPod replacement software. Personally, I like the software that came on my iPod and iTunes just fine, but there are lots of options out there.
Re:Who? (Score:2)
peran is a troll. (Score:5, Insightful)
"but as is becoming increasingly clear with Apple, that success is not to do with doing good business, rather it's just bad accounting"
have you been outside these last two years? you go on the subway or any metro and you see that 1 out of 5 people has white earbuds sticking out of thier ears.
Re:peran is a troll. (Score:5, Funny)
So? (Score:2)
But we don;t know at this moment in time because the accounting, in the words of Apple, can't be trusted.
Re:Who? (Score:4, Insightful)
As Neal Stephenson said about Apple in In the Beginning was the Command Line [cryptonomicon.com]:
The smaller dealership continues to sell sleek Euro-styled sedans and to spend a lot of money on advertising campaigns. They have had GOING OUT OF BUSINESS! signs taped up in their windows for so long that they have gotten all yellow and curly.
Re:Who? (Score:4, Insightful)
Wow, you don't get out much do you? I don't really understand the financial stuff that much. I really don't understand what happened at Enron other than employees lost their benefits. (which really sucks) I also don't really understand what is going on in this case but, to say that the success of Apple is only due to dodgy accountin is just mind boggling. I think even someone who hate's apple would say they were successful in selling the iPod. That's why everyone talks about an "iPod killer." But they still haven't been displaced. With the switch to intel processors, the number of computers they are selling has increased. I for one know quite a few people who now have MBP's who would have never before considered getting a mac.
But whatever, go outside and start counting the number of iPods you see. Then start taking a look at the number of Mac laptops you see. Steve Jobs, like him or not, saved apple by bringing the technology from NeXT to apple. I admire him for what he's done to both Apple and Pixar. Also this is Apple who is doing their own internal investigation, not someone else who caught them in the act. This is them saying "wait, I think we made a mistake." From other comments I've read, this seems to not be a big deal (certainly not on the scale of Enron) and if Apple makes ammends and says basically, "we screwed up but now we've fixed it," I give them a lot of credit.
Options Backdating != Enron (Score:4, Informative)
Here is an article that explains how the options backdating scandal started:
http://www.businessweek.com/investor/content/may2
To summarize, a finance professor decided to calculate the return on companies for the 30 days
after the award on of options on an unusual date for such award. He looked at 1668 such awards
and found that those stocks did 5% better than average for those 30 days each time.
Later, the Wall Street Journal calculated odds of 300 billion to one that that would happen by chance.
So a red flag can be raised on a company by mining this data, but it doesn't prove that
backdating took place. The SEC has decided to investigate a bunch of these companies.
It is likely that they will find wrongdoing in at least some of these cases.
One interesting note was that this practice has been greatly reduced as of 2002, when Sarbanes-Oxley
required reporting of options awards within two days of the award.
The details of how options are granted determines whether they have to be shown as an expense or not,
so some companies involved are having to restate earnings.
The largest impact I'm aware of is UnitedHealth Group, which according to the above article may
have to report $300 million in additional expenses.
Enron was fraud on a massive scale to hide tremendous losses.
Backdating options is a lesser fraud that puts more money in the pockets of executives.
It does not imply that the companies involved are not making money.
It also hasn't been proven for any company, yet.
Re:Who? (Score:1)
Re:Who? (Score:2)
This is a serious issue, and Apple appears to be actively cooperating in investigating itself, so it will probably wind up as a black mark, and possibly a fine (already disclosed in Apples
"...whether or not Steve Jobs will be able to..."? (Score:5, Interesting)
"Apple said in June that one of the stock option grants was to chief executive Steve Jobs, but it was subsequently canceled and resulted in no financial gain to Jobs."
So why is there some statement quoted questioning the continued status of Jobs as CEO?
Seems like someone is playing fast and loose with the article.
Re:"...whether or not Steve Jobs will be able to.. (Score:5, Insightful)
Re:"...whether or not Steve Jobs will be able to.. (Score:2)
Snarky is the new black.
Re:"...whether or not Steve Jobs will be able to.. (Score:2)
Re:"...whether or not Steve Jobs will be able to.. (Score:2)
Re:"...whether or not Steve Jobs will be able to.. (Score:2)
Even Microsoft has More Options Troubles.... (Score:5, Funny)
Oh, wait!.. you meant Stock options?
bah (Score:4, Insightful)
Re:bah (Score:1)
In fact, if you'd bought AAPL two weeks ago at $53, and sold yesterday at $68, you would have pocketed a nice piece of change.
I had problems reading TFA (Score:4, Funny)
PARSER STACK EXPLOSION.
Re:I had problems reading TFA (Score:1)
Trend? (Score:1)
Re:Trend? (Score:2)
Funny thing is I actually see a positive in Apple getting out in front on this and coming clean. It's the only way to weather this and come out healthy. Contrast this with Ken Lay of Enron, who denied to his dying day that Enron had ever did anything wrong.
Stock options help attract employees (Score:2)
I smell misrepresentation (Score:4, Insightful)
Re:I smell misrepresentation (Score:2)
If it really was that bad, would Apple really do it?
Are you really that naive?
heavy FUD (Score:3, Insightful)
This is basiclly a case of "oops we paid our executives 12 million dollars not 10...our bad"
Re:heavy FUD (Score:2)
But there is grounds for a rise in the risk premium.
Stupid submitter (Score:5, Insightful)
The original article makes no mention of "backdating options" whatsoever. "Backdating options" is an illegal and criminal method of giving employees more money by chosing the date of an option grant long after the option is granted, usually to a time when the stock was low. Even just with the usual random fluctuation of the share price, this can make options much cheaper and therefore more valuable for the employee. However, nothing like that was mentioned in the article at all. What was mentioned was "possible irregularities in the accounting" of the value of stock options, which was found by Apple itself in an internal inquiry that it started itself, and it was Apple who called the SEC about it, not the other way round. And since the rules for the accounting of stock options have changed a lot in the recent years and are quite complicated, it is quite possible for a company to account them incorrectly by mistake. The bit that the submitter added about Steve Jobs has been pulled out of thin air altogether, just to make it sound more interesting.
This is like Mr. Smith calling the Inland Revenue, telling them that he might have made a mistake in his tax returns, and a submitter on Slashdot calling him a thief and criminal.
Re:Stupid submitter (Score:1)
There are other oddities when looking over the 8K filings as well. Some of the accounts payable and receivable don't jive. It appears that Apple may been padding their profits for the past several quarters. This is pr
Re:Stupid submitter (Score:2)
It goes both ways.
Re:Stupid submitter (Score:2)
Naw, Jobs is staying, here's the Corporate pitch (Score:2)
Or some such variant thereof.
Re:Naw, Jobs is staying, here's the Corporate pitc (Score:2)
Step by step (Score:5, Insightful)
Correct.
"after finding more backdated options problems. "
Incorrect.
"Companies backdate their stock options by looking back over a period of time and choosing a historical low as the option strike price. While not illegal, this must be fully disclosed to investors and properly accounted."
Incorrect. Backdating options is illegal, that's what people will go to jail for. That is also what Apple hasn't done .
Expect more uncertainty in the coming weeks as regulators must now uncover how much of Apple's record profits were incorrect "
Regulators are not involved in this at all. This is an Apple internal inquiry.
"as well as whether or not Steve Jobs will be able to continue leading the company."
Taken out of thin air.
In other words, the submitter took one line from the quoted article, then added 90 percent bullshit to it.
Re:Step by step (Score:2)
Bullshit? (Score:1)
But we visit it daily all the same.
Re:Step by step (Score:2)
You are also correct that it is an internal inquiry right now, but Bloomberg seems to cast doubt on it remaining entirely internal.
And yes, that line about Steve Jobs is complete FUD crap. The submitter sucks.
Re:Step by step (Score:2)
No, you are wrong. Backdating options is not illegal [uiowa.edu] provided you account for it properly. The scandals currently unfolding are largely related to improperly backdated options (in other words, the reporting requirements were not met), but also to other irregularities in the reporting of option grants. Whether Apple are guilty of improper manipulations (and what those manipulations might have
Re:Step by step (Score:2)
Re:Step by step (Score:4, Informative)
http://www.usnews.com/usnews/biztech/articles/060
Re:it *was* backdating (Score:2)
It is legal to award an option today for the price the stock was at at some point in the past.
It is not legal to award an option today and then claim it was actually awarded at some point in the past.
A simple plan. (Score:5, Insightful)
2. Wait for damage to Apple stock prices.
3. Buy cheaper shares of Apple stock.
4. Profit.
Re:A simple plan. (Score:2)
Re:A simple plan. (Score:2)
Especially after they'll sue Gnome, which has had this feature for years now, and has therefore been infringing on Apple's intellectual property long before Apple even invented it !
New low for /.? (Score:2)
This may be the most blatantly misleading submission to
Nancy Heinen (Score:3, Interesting)
Stock Options (Score:2)
Jobs options (Score:4, Informative)
If this really bothers you, I'll take your apple stock.
For those determined to pillory Jobs for this, I might suggest reading this sfgate [sfgate.com] article which says, in part:
Valuation of stock options is and has been under a lot of debate recently. Apple looked over its books, discovered they had done something wrong according to current (and possibly past) accounting practices, and went to work to correct the problem.
Steve Jobs, who is richer than Croesus and really only bothers to count the number of digits on his bank statement, decided to dodge potential trouble more than TWO YEARS ago, which helps their position now.
Which part of this fits the "Steve Jobs is a greedy corporate raider" theory?
They screwed up. They admitted it. They'll take a hit. These aren't the droids you're looking for.
Re:Jobs will have to leave (Score:1)
Re:Jobs will have to leave (Score:2, Insightful)
Re:Jobs will have to leave (Score:5, Insightful)
Re:Schadenfreude (Score:3, Informative)
Schaden = Damage
Freude = Enjoyment
In this case the literal translation is accurate, it's enjoying something (someone else) being damaged.
Re:Schadenfreude (Score:1)
Re:Schadenfreude (Score:2)
/Mikael
Re:Schadenfreude (Score:2, Funny)
Try to fool me...
Re:Just Like Mic(rosoft) (Score:2)
By the way, don't you think you sort of have your head up your ass because you're taking this whole mentally retarded comment thing too far?