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Apple Announces More Options Troubles
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."
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... :-)
Could be worse. Could be raining.
Wouldn't this be an accounting issue, for the Chief Financial Officer, not the Chief Executive Officer (Jobs)?
Michael
There is no cryptographic solution to the problem where the intended receiver and the attacker are the same entity.
Who in their right mind would remove a CEO (a loved one at that) of a successful company? A company whos share price is soaring nevertheless
The only mention in the article of Jobs is:
"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.
Some days it's just not worth
chewing through my restraints.
Last I heard, there's gonna be Six Different Options to license a single release of their OS - namely, Windows Vista. And everyone from Dvorak to Thurrott has predicted lots of Options Troubles with Vista :-)
... [hides under table]
Oh, wait!.. you meant Stock options?
If you keep throwing chairs, one day you'll break windows....
Bad news for shareholders and possibly some Apple employess, but unless this is an extremely massive problem it shouldn't really have much effect after a couple of initial punishments.
Haiku for you!
Exactly - I'm at the edge of just giving up on reading Slashdot entirely with the retarded articles coming through lately with little jabs thrown in throughout. It's always had it to a small degree, but it's just getting worse lately.
Well.. it really only ever got borrowed from German:
Schaden = Damage
Freude = Enjoyment
In this case the literal translation is accurate, it's enjoying something (someone else) being damaged.
LOS ANGELES, Aug 3 (Reuters) - Apple Computer Inc. (AAPL.O: Quote, Profile, Research) said on Thursday it would likely need to restate earnings and will delay filing its quarterly report because of additional irregularities it found in its accounting of stock options and its shares fell 6.6 percent.
PARSER STACK EXPLOSION.
No folly is more costly than the folly of intolerant idealism. - Winston Churchill
While I have no actual idea what that means I have a feeling the interpretation in the summary is a bit sensationalistic. If it really was that bad, would Apple really do it? Or are we really facing an Appleron?
Justice is the sheep getting arrested while an impartial judge declares the vote void.
The shareholders might not like tolerate things like this, but they're clever enough to know that Jobs IS Apple, and they'd lose a lot of their appeal if they made him resign. Remember what happened last time he left?
1. There's a difference. Enron was purposefully and illegally cooking their accounting books and they got caught. Apple themselves noted a discrepancy between practice and what should be reported to shareholders. Enron executives bilked shareholders out of billions of dollars. Apple granted stock options backdated at the lowest price and did not include them on a report. 2. One company self-reporting a problem does not make a trend. There are thousands of companies, and statistically I would wager that there are more than a few that have also reported similar discrepancies over the course of their existence. Thus, there is nothing stating that the CEO should have to leave his company for discrepancies filed by his own company (and the finance department, no less). Your perception is not reality. While I agree that the 'public' won't tolerate being ripped off, they also should know that this doesn't fit the 'being ripped off' scenario. I understand where you're coming from, but I don't think this is such a scenario.
This is basiclly a case of "oops we paid our executives 12 million dollars not 10...our bad"
I just love this comment..
"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.
Sometimes I think people who submit articles to Slashdot are pure idiots.
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.
"Apple today announced that they will be withdrawing their financial reports back to September 29, 2002 and delaying the filing of future reports "
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.
That's not real Swedish. There's no "bork, bork, bork" at the end.
Try to fool me...
Slashdot - where whining about luck is the new way to make the world you want.
1. Post bogus story to /., with incorrect statements and FUD about Jobs being forced to leave Apple.
2. Wait for damage to Apple stock prices.
3. Buy cheaper shares of Apple stock.
4. Profit.
but the iPod simply requires that you use proprietary software to transfer music onto it--not uncommon for peripheral devices, and not anticompetitive
This is no longer the case. There are third party and Free applications for the iPod now. Check out rockbox 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.
It's not offtopic, dumbass. It's orthogonal.
Do you think this is why Nancy Heinen left? They never did give a good reason for her leaving. Maybe she wanted to make the misinformation public and they disagreed. Or maybe she was the reason for the mistake...
Boom Shanka
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 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.
... grumble, grumble, grumble, mutter, mutter, Millenium... Hand... Shrimp, I tol' 'em, I tol' 'em.
The scale of this is much smaller than Enron.
0 06/pi20060523_848601.htm
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.
"We can't solve problems by using the same kind of thinking we used when we created them." -- Albert Einstein