Apple Believes SEC Investigation Poses Risk

[joeboy_45101]

What the hell is the SEC waiting for? There is nothing else to investigate, this isn't even a big deal as far as corporate scandals go!

IMHO, this is clear evidence that government reformation is desperately needed. Current U.S. government == kludge.

 

[Canerican]

Let's all remember that backdating options is completely LEGAL. It just has to be disclosed and accounted for properly and that is where the questions lie.

Exactly, but I think a good parallel would this: You can have a firearm, but it must be reported to the government, if you don't BIG TROUBLE... if you do, not problem...

I have a sad feeling that this may be indicative of bigger problems that will come to light soon... You know what they say, where there is smoke, there is fire.

 

[MrBigMac]

Lottsa Conjecting a goin on here

 

[EagerDragon]

Exactly, but I think a good parallel would this: You can have a firearm, but it must be reported to the government, if you don't BIG TROUBLE... if you do, not problem...

I have a sad feeling that this may be indicative of bigger problems that will come to light soon... You know what they say, where there is smoke, there is fire.

Maybe, or maybe they are out for blood no matter how small of an issue it maybe. Make an example out of Apple.

Do they realize that what they are doing may hurt the stockholders more than what actually may had happed?

I'm afraid they realize it but don't care, since they are looking for the "truth". Just like a Pit Bull.

 

[fustercluck]

All I know is that I sure am glad they're charging that $1.99 for the 802.11n driver/enabler. That will certainly show the SEC they're serious about governance.

 

[BenRoethig]

They did an internal investigation, restated some items, turned it ALL over to the SEC on hopes full cooperation and internal correction would do the trick. Remember well, the issue they are rooting out is one which was common practice before, was endorsed by the accounting firms, and was thus and therefore felt safe by management. Recent rule changes "clarified" the practice as being non-compliant and was written in such a way firms had to go "back in time" to comply. That is usually not allowed in law. It was here.

The SEC should make interim findings of folks they have "cleared" or something to indicate any company they are investigating has a "narrow scope" of inquiry.

It's not just Apple.

Rocketman

In a criminal probe it's best to always best to assume the corporate investigation is biased in favor of helping their employers.

What the hell is the SEC waiting for? There is nothing else to investigate, this isn't even a big deal as far as corporate scandals go!

IMHO, this is clear evidence that government reformation is desperately needed. Current U.S. government == kludge.

This isn't CSI where everything is done in a couple of hours. Real investigations take time.

 

[akadmon]

But Leopard and the iPhone will be out by then, and that combined with this probably being finished will make AAPL start to go back up by July.

Leopard is not going to have a huge impact on Apple's share of computer sales. Yeah, a lot of us will upgrade (I know I will), but unless some serious flaws in Vista come to light (something that would warrant a lead story on the evening news, nothing less than that), fewer PC users will be switching to Leopard than were switching to the current Mac OS before Vista, and those purchasing for the first time will, in overwhelming numbers, buy what they see on the shelves of their local Best Buy. As for the iPhone, Apple should have stuck to the iPod -- the iPhone will be the new Newton! With all its limitations (no 3rd party software, limited capacity, no support for memory cards, Cingular singularity, high price), it will be but a blip on the radar screen (I predict less than 1 million units sold this year world wide). Most people already have a phone that does a decent job of keeping them connected, and all they really want is a touch screen (3") iPod (PDA capabilities would be a bonus, but not an absolute must have). Why Apple announced the iPhone months before it will actually be available in stores makes absolutely no marketing sense. The early announcement is bound to hurt sales of the current generation of iPods, as people anticipate the release of the touch screen iPods later this year (e.g., I decided to get a Shuffle to get me by after my 3Gen iPod tanked last month). Once the new iPods hit the street, nobody will want the iPhone, unless the price drops below $300. By then, AAPLE will be back to $80

 

[Canerican]

Do they realize that what they are doing may hurt the stockholders more than what actually may had happed?

Yes, but crime is crime. Enron caused thousands to lose their life savings, still, they deserved all they got. Tyco caused a huge lose, Citigroup, Nortell etc. Corporate hurts many, but that doesn't mean that we should let it happen... Give Apple their day in court, if they aren't guilty, then I believe that everything will return to previous levels, if they are guilty, it will spell disaster.

There is nothing else to investigate, this isn't even a big deal as far as corporate scandals go!

I haven't read of any worse than this in a while... maybe some of the stuff Wal-Mart has done comes close... If someone can point out a bigger scandal that is not being investigated, I would love to read about it.

I'm not in any way hoping tht Steve Jobs gets in trouble if he is innocent, I believe that he is the second best CEO out there beside Meg Whitman. But corporate criminals deserve to feel the full force of the law. Just look at the discussion here, people are saying (essentially), "if he is guilty that bad, but there are worse things/bigger fish to fry/its not worth it."

The argument that there is worse stuff going on is not valid... if there is a murder and a burglary, do you just investigate the murder? I hope not.

EDIT: I was looking for this link... notice the dates...
http://www.forbes.com/2006/04/20/CEO-pay-hiding_cx_hc_06ceo_0420hidepay.html

 

[SiliconAddict]

I dont really know what is going on?

Is Apple ok?

or are they in trouble?

A little from column A, a little from column B. Prob more in column B though.

 

[Peace]

If the SEC finds out that Apple hid more than they have disclosed Apple will lose Steve.

 

[joeboy_45101]

This isn't CSI where everything is done in a couple of hours. Real investigations take time.

All I'm saying is, if my girlfriend was this late I'd have been a daddy by now.

What else is there to investigate? Corporate misconduct is bad, but when the government acts like this in an investigation then it makes you wonder what it's motives are. I mean for Christ's-sake look at how Wal-Mart runs its business. I bet you could go to any Wal-Mart store and find at least 3 major labor and safety violations. And, let's not even get into how they treat vendors and suppliers.

By the way, I object to the way the Enron situation was handled. Ken Lay and his cronies may have spent time in prison but look at how the employees had to suffer. They lost their livelihoods do to that mess, and in the end never got any sort of compensation. I think these things can be handled much better.

 

[IJ Reilly]

It's the government. That's explanation enough.

Argh. This thing with Apple is annoying, but I'm hardly surprised. Unfortunately, stock fraud is too common to be shocking.

Number 1, the SEC did not start their investigation until Apple's internal investigation was completed, which was only about a month ago. Nobody expected anything to happen on the SEC front for months after that.

Number 2, stock fraud is not being investigated. There was no stock fraud.

Finally, anyone who's reacting to this investigation or Apple 10Q "revelations" simply has not been paying attention up until now. Nothing new or the least bit unexpected has happened on this story for weeks.

 

[Evangelion]

This is a very good way to convince a good engineer to put out his best work and to not seek work with other companies.

Why do you need stock-options for that? Seriously? Why couldn't the same thing be achieved by giving the employee a bunch of shares in the company, instead of using some options-shenanigans? Stock-options just make the whole thing a lot more complex than it needs to be, as this whole backdating-issue so clearly demonstrates. Want to tie your employees to the company, and give them incentives to do their best? Make them shareholders, by giving them shares in the company. You don't need options for that.

 

[Evangelion]

A little thing called tax. It's not quite that easy and so that's why they do it. It is about the 'money' as they say, precisely by not letting Uncle Sam dip too much into your pockets.

Yes, it really is that easy. You give the employee a bunch of shares. Uncle Sam becomes interested, and wants a cut. Well, the employee just received a bunch of shares worth X dollars, and now they couldn't afford to pay taxes worth x-80%?

Like I said, optiuons make the whole thing more complicated than it needs to be. Want proof? Apple and their SEC-investigation. Nothing like that would have happened if they had just given the employees a bunch of shares. But no.

 

[Evangelion]

You are correct, if the user can sell the shares, I agree - but read the original post - the employees were to be restriced from selling for a period of time. There are many many options (pun intended) when compenstating employees. ISO is actually a very good one when used properly and in context. Don't through baby out with the bath water.

Those things could be worked around. The employee might be allowed to sell enough shares to pay the relevant taxes. Or what if the employer handled the taxes for him? Or what if the shares would be placed in a trust, where they would be kept for the employee, but the employer wouldn't own the shares himself for severla years?

I'm no accountant, but taxes could be handled just fine.

 

[How Goes It]

Exactly, but I think a good parallel would this: You can have a firearm, but it must be reported to the government, if you don't BIG TROUBLE... if you do, not problem...

Not actually. In L.A. the D.A. just let go of a gang member whose bullet killed a girl in her house. This girl had nothing to do with the shoot out the gangs were involved in. 10 to 1 says that gun was not licensed.

If you were a legal gun owner in the suburbs, and you shot someone invading your home --- good chance the D.A. would bring charges against you.

You don't actually think the law is supposed to make sense do you?!!!!

You know, if Jobs were one of the true rip off artists who gets a golden parachute and leaves the company in shambles, that would be one thing. But realize when he took over, the stock was around $10 a share. Call me crazy, but doesn't it seem like time would be better spent going after the guys that are really ripping off the companies while the stock is going down the drain. Oh well, if justice is served, and Apples stock goes down the toilet, and though the shareholders will likely end up far poorer, at least the law will be held up -- you know, just like it was when Sandy Berger walked into the high security archives and trashed docs. Do that as a mere mortal, and you would be in for years. As a government insider you have a far greater chance of skating. Now that's what justice is all about !!!! No bleeding heart liberal here. I just think that justice across the board can at times be more than laughable. Enough with the seriousness of fabricating the board meeting and therefore lying to the gov.. Go after someone that is really doing some damage.

 

[DeepIn2U]

Concerns & Shinannagins

I'm wondering if this timing of this report is at all related to MS Vista so that they can have ALL the glory? Is there EVER in the history of the two companies ever release any anticipated & amazingly great products/services within the same week that would have a profound/major impact on either camps users? EVER!?

1> Apple needs to seriously get over this and BAKE in OIL the dinks that screwed this all up.

2> They should STOP wasting cash privately by an independent board of auditors (remember 10yrs at a respectable firm makes partner and they make over $740'000/year)! Apple now needs to get the SEC actively involved in a FULLY co-operational standing = nothing to restate adjust etc when the smoke clears ... believe me there WILL be smoke!

3> Engineering team & designers NEED to stay focused on giving us the absolute BEST product updates this year.

4> For Apple to have a SUCCESSFUL Spring - this SHOULD be resolved before Leopard releases ... if not we as current, longstanding, and ppl like myself salivating potential converts MUST upgrade to give Apple what it needs $$ to breeze by this without a hair touched - I may be looking too badly at this news.

5> Yeah they can do it

 

[Evangelion]

Executive compensation in general is a mess. Options aren't the problem. Stock options are probably the most sensical means of compensation, particularly for executives-- your compensation is tied to the companies performance rather than making millions just for sitting in the chair.

And you could do that by giving them shares in the company, instead of giving them options. When they get hired, they could receive X amount of shares, and the normal monthly salary. They could also receive additional shares as bonuses or something for example. Is there anything wrong with something like that? Why do we need stock-options? Want to tie their compensation to the performance of the company? Turn them in to shareholders. Why make that more complex by giving them stock-options instead of outright shares?

The reason companies don't just hand shares to employees is that they would need to buy the shares and pay the market rate and they would dilute the price of existing shares.

If Apple (for example) gave out 200 million dollars worth of shares to the employees, it would have neglible effect on the shareprice. And 200 million would mean about $10.000 dollars for every single Apple-employee. If they limited that share-compensation to top 10% of employees, it would mean $100.000 worth of shares. Top 1% (200 employees) would mean $1.000.000 worth of shares.

So, 200 million dollars worth of shares to employees. For reference, Apple's market-cap is 72.21 billion dollars as we speak. Apple has 860 million shares out there. Giving employees those shares would increase that amount by a whopping 238.095. A neglible amount. And you would now have lots of employees with direct vested interest in seeing that shareprice go up.

 

[photomaniac]

Exactly, but I think a good parallel would this: You can have a firearm, but it must be reported to the government, if you don't BIG TROUBLE... if you do, not problem...

I have a sad feeling that this may be indicative of bigger problems that will come to light soon... You know what they say, where there is smoke, there is fire.

Okay, you just totally ruined my night
I pray that is not the case with Apple

 

[WilliamLondon]

And you could do that by giving them shares in the company, instead of giving them options. When they get hired, they could receive X amount of shares, and the normal monthly salary.

And get a big tax bill day 1 for those shares? The reason options are given is that on day 1 they have NO value - they are worth nothing. Shares on the other hand have value and you'd end up with a tax bill for receiving something of value from a company the day you started.

Thanks, but as an ordinary employee, I'd prefer stock options.

 

[Evangelion]

And get a big tax bill day 1 for those shares?

*sigh*.... Like I already said, those taxes could be handled. Everybody makes it sound like those taxes make something like that utterly impossible, and we therefore absolutely NEED options. I mean, if you exercise those options, you get hit by taxes, right? So where is the difference here? You get worthless options, no taxes. You exercise those options, and you get hit by taxes. You get shares in the company, you get taxed. Regardless of what you do (unless you let those options go void), you get taxed. Is this a case of "I'd rather get taxed sometime in the future, instead of getting taxed right now"?

Thanks, but as an ordinary employee, I'd prefer stock options.

And because of those options, we are having all kinds of problems. Thanks a lot!

 

[Soulstorm]

I heard that Steve Jobs has personally hired a well respected law firm to his defense, and that should he faces legal issues, he will be temporarily be replaced by Google CEO.

I only hope that we soon have an estimate as to when an official report from CES will come out and have some results. I hate being forced to wait for an answer. Do we have an estimate?

 

[jhedges3]

I'm wondering if this timing of this report is at all related to MS Vista so that they can have ALL the glory?

You’re considering whether the timing of Apple’s 10-Q filing is related to the Vista release? And the timing is intended to give them, whom I take it means Microsoft, all the glory?

Huh. I’m not actually sure what you’re talking about. What is your reason for thinking there is any relationship between the filing and Vista? And why is it you feel that someone would use the timing to give someone else all of what glory?

It seems pretty clear that if Apple has to make a quarterly filing to the SEC then they have to do it. I don’t see why there is anything more to it than that.

 

[surferfromuk]

Speaking from a UK perspective I think this investigation is nuts.

Just like the way the government went out to destroy Microsoft or AT&T all those years back was nuts. I couldn't understand looking from the outside and into your US fishbowl why your government conciously wanted to kill a company that ruled in the WORLD of computers.

...and it's doing exactly the same thing again..

It's the kind of behavior I'd expect from a commie government - out to destroy the jewels in the crown of a free market economy, not from a freedom loving country like America. It's not like Apple are some mafia family swindling and killing to make a buck. They have literally given the world incredible products.

And even if it turns out a few accounting errors were made let's not forget one thing ;

If steve hadn't come back there would be no Apple today - no profits, no ipods, no Leopards, no iphones.

Your government is doing it's level best to screw up up the single most innovative corporation that's perhaps ever existed on planet earth. Kill Jobs and you've killed Apple - Kill Apple and the world loses something it may seriously never get back for another 100 years...This is like the Spanish inquisition. Stupid government trying to plunge your country into a dark age - what do they care ? - they rule poverty as they rule prosperity. It sucks folks!. This is not big crime - Apple held up hand and said 'whoops' we made a booby - sorry - how can we put this right?'...

It's not like they are some nasty oil company funding tribes of mercenaries in Africa is it ?

Come on - forget it - impose the fine - slap a few wrists and move on to some real crime. Let BUSINESS prosper.

Nuts...nuts!!Seriously, ring your congressman or something - your going to lose something precious....freedom!

 

[jhedges3]

2> They should STOP wasting cash privately by an independent board of auditors (remember 10yrs at a respectable firm makes partner and they make over $740'000/year)! Apple now needs to get the SEC actively involved in a FULLY co-operational standing = nothing to restate adjust etc when the smoke clears ... believe me there WILL be smoke!

You believe that Apple is wasting money by having independent auditors during their SEC investigation because you think that partners at auditing firms make 740 per year?

I fail to see your reasoning. Do you feel that Apple, for example, has seriously miscalculated the benefit that such auditors bring to this process and to their oversight in general? Like do you believe they should, say, forget about having independent auditors during this critical time, they’re too expensive, we’ll just either not have auditors at all or we’ll do it ourselves? I wonder if there are others on their board, for example, who feel as you do and have been begging them to drop the auditors. Do you feel that the lack of such auditors would be without any negative consequences on their price and on, among other things, their membership in NASDAQ Global Select?

I also don’t see how not having independent auditing would move them in the direction you suggest they go, ‘FULLY cooperational standing’. My impression was that such auditing, and the transparency shown in their 10-Q, is in keeping with Apple’s desire to hold to the highest standards, to be fully compliant.