Apple Computer Inc. (AAPL) and Stock Options
The ever-widening stock option scandal that encompasses over 190 US companies has taken a serious turn for Apple Computer. The Financial Times reported Chief Executive Officer Steve Jobs was given stock options in 2001 without authorization of the board. The news sent a shockwave through shares. The stock dropped as much as 6% on Wednesday after news surfaced that Jobs had hired a lawyer to represent him in federal inquiries and that some officials may have falsified documents.
The FT report stated records purported to show that a full board meeting conducted to authorize the options was later falsified. The story did not implicate any person or persons who allegedly falsified the report. Jobs later surrendered his options before they were exercised, which implies he did not gain any benefit from the options. The SEC is currently investigating the evidence, according to the article. Jobs owns roughly 5.43 mln shares of Apple, or 0.6% of the company, according to filings. His stake is worth $442 mln as of Wednesday's closing price.
The maker of the iPod began an internal investigation of its stock option grants, which did include one such grant to Jobs, back in June. In October, Apple stated it had found 15 misdated grants from 1997 to 2002. Jobs was aware in some instances that he didn't benefit, according to the company, and he apologized to shareholders. At the time, Apple stated two former unnamed executives raised "serious concerns." The Recorder, a San Francisco-based legal newspaper, first reported Wednesday on the discovery of possibly falsified documents that were unearthed during Apple's internal investigation and passed on to the US Attorney's office.
These charges are a serious matter and create a great deal of uncertainty regarding Apple's future. Jobs is a technological visionary and solely responsible for Apple's resurgence over the past few years. The implication of Jobs will continue to overshadow channel checks that suggest Apple had a very strong holiday sales season for iPods and Macs. For our part, we argued a bull case for Apple on July 14th, during the stock's near-term low. Since then, shares have gained over 60%. Given these returns, as well as the upcoming seasonal weakness in the first quarter and the seriousness of the options matter, we would be trimming positions at this time.
--Kimberly DuBord, Briefing.com
The FT report stated records purported to show that a full board meeting conducted to authorize the options was later falsified. The story did not implicate any person or persons who allegedly falsified the report. Jobs later surrendered his options before they were exercised, which implies he did not gain any benefit from the options. The SEC is currently investigating the evidence, according to the article. Jobs owns roughly 5.43 mln shares of Apple, or 0.6% of the company, according to filings. His stake is worth $442 mln as of Wednesday's closing price.
The maker of the iPod began an internal investigation of its stock option grants, which did include one such grant to Jobs, back in June. In October, Apple stated it had found 15 misdated grants from 1997 to 2002. Jobs was aware in some instances that he didn't benefit, according to the company, and he apologized to shareholders. At the time, Apple stated two former unnamed executives raised "serious concerns." The Recorder, a San Francisco-based legal newspaper, first reported Wednesday on the discovery of possibly falsified documents that were unearthed during Apple's internal investigation and passed on to the US Attorney's office.
These charges are a serious matter and create a great deal of uncertainty regarding Apple's future. Jobs is a technological visionary and solely responsible for Apple's resurgence over the past few years. The implication of Jobs will continue to overshadow channel checks that suggest Apple had a very strong holiday sales season for iPods and Macs. For our part, we argued a bull case for Apple on July 14th, during the stock's near-term low. Since then, shares have gained over 60%. Given these returns, as well as the upcoming seasonal weakness in the first quarter and the seriousness of the options matter, we would be trimming positions at this time.
--Kimberly DuBord, Briefing.com
Labels: AAPL, Apple Computer Inc.
posted by Stock Administrator @ 10:36 AM
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