Apple Delays Report on Quarterly Profits

Apple has notified the Security and Exchange Commission that it will miss the deadline for filing the quarterly report detailing its financial figures for the most recent period. Unfortunately, delaying this report might be the most insignificant problem facing the company if the SEC launches an investigation into the recent stock option post-dating scandal that is still unresolved.

Amid rumors of financial irregularities, Apple launched an investigation of its stock option granting practices. Recent allegations suggest that numerous companies (including Apple) have come to rely upon the practice of post-dating stock options for favored executives in order to get them more compensation.

Apple has also admitted that it will have to restate earnings reports for the past 15 quarters and is conducting a probe that might end up causing Apple to restate earnings all the way back to 2002. Speculation at Apple has been that their investigation will uncover substantial discrepancies that will need to be accounted for in the revised earnings statements.

It seems as though many of our corporate leaders are trapped in a pattern of illegal behavior. First it was Enron, using offshore shell companies to hide and accumulate bad debt. After the good folks at Enron got burned, people realized they needed to find a new scam that would fool everyone and allow them to rake in the cash.

This time, Apple and other companies promised massive blocks of stock options (sometimes a large percentage of the company) to top level executives for the excellent work they do every day. The problem is that they allowed these executives to pick the day they wanted the stock purchase orders to go through at the end of the year, when it was simple to look back and choose the day with the lowest price to buy your personal shares.

The folks at Apple had to know better than that, so why did they do it? Apple certainly isn’t the only one guilty of trying to jump on the stock option post- dating bandwagon, but many (like myself) imagined Apple to be different than most companies. It is possible that the post dating episode was an oversight and that there was no irregular financial activity going on, but the whole thing just smells bad.

Apple has notified the Security and Exchange Commission that it will miss the deadline for filing the quarterly report detailing its financial figures for the most recent period. Unfortunately, delaying this report might be the most insignificant problem facing the company if the SEC launches an investigation into the recent stock option post-dating scandal that is still unresolved.

Amid rumors of financial irregularities, Apple launched an investigation of its stock option granting practices. Recent allegations suggest that numerous companies (including Apple) have come to rely upon the practice of post-dating stock options for favored executives in order to get them more compensation.

Apple has also admitted that it will have to restate earnings reports for the past 15 quarters and is conducting a probe that might end up causing Apple to restate earnings all the way back to 2002. Speculation at Apple has been that their investigation will uncover substantial discrepancies that will need to be accounted for in the revised earnings statements.

It seems as though many of our corporate leaders are trapped in a pattern of illegal behavior. First it was Enron, using offshore shell companies to hide and accumulate bad debt. After the good folks at Enron got burned, people realized they needed to find a new scam that would fool everyone and allow them to rake in the cash.

This time, Apple and other companies promised massive blocks of stock options (sometimes a large percentage of the company) to top level executives for the excellent work they do every day. The problem is that they allowed these executives to pick the day they wanted the stock purchase orders to go through at the end of the year, when it was simple to look back and choose the day with the lowest price to buy your personal shares.

The folks at Apple had to know better than that, so why did they do it? Apple certainly isn’t the only one guilty of trying to jump on the stock option post- dating bandwagon, but many (like myself) imagined Apple to be different than most companies. It is possible that the post dating episode was an oversight and that there was no irregular financial activity going on, but the whole thing just smells bad.