Apple puts backdating issue behind it
EmptyApple Computer shares, hung over from a delayed annual report due to irregularities surrounding option grants and revelations that CEO Steve Jobs knew about those irregularities, got a boost Friday.
Shares rose 4.9% to $84.84, spurred by release of the delayed annual report and on the company's bullish assessment of Jobs himself. The company's chief executive, who co-founded Apple 30 years ago, seems safe in his role there, and Wall Street is pleased about that.
"While all of the potential implications of Apple's options backdating cannot be neatly resolved with a single filing, Apple's long-awaited 10K puts to rest the relatively minor impact of its backdating issues," wrote analyst David Bailey of Goldman Sachs. "This should allow the stock to be driven more by fundamentals in the near term, where we see several positive catalysts that should take the stock higher."
Some of those positive catalysts might come to light later this month in the form of some new products that Jobs might reveal at his annual Macworld convention.
What Apple said Friday, specifically, was that, in its three-month internal probe, it discovered 6,428 stock option grants between 1997-2002 that had been backdated, forcing the company to record an $84 million noncash charge.
Jobs, according to Apple, was "aware or recommended the selection of some favorable grant dates," Apple said in a statement, before adding that Jobs did not benefit from the grants in question nor did he appreciate "the accounting implications."
Apple also said that 7.5 million shares were granted to Jobs at a board meeting that, upon further investigation, never actually occurred, but Jobs did not benefit from those, either.
The part that mostly enthused Wall Street, though, was that the company found that none of the current management was engaged in any shenanigans. Instead, the company seemed to be blaming a couple of unnamed senior executives no longer employed there.
The special committee conducting the internal investigation, headed by former Vice President Al Gore and Jerome York, chair of Apple's Audit and Finance Committee, gave an unambiguous thumbs up to Jobs.
"The board of directors is confident that the company has corrected the problems that led to the restatement, and it has complete confidence in Steve Jobs and the senior management team," they said.