Deadlines Looming For Apple Delisting In Options Case
The Recorder, a publication of Law.com, reported Wednesday that fake documents may have been created as part of Apple's stock options backdating scandal, and that company CEO and Chairman Steve Jobs has even hired his own legal counsel. An Apple spokesman did not immediately return telephone calls seeking comment on the article, which also indicated federal prosecutors based in San Francisco have joined the probe.
The investigation plaguing Apple concerns several problematic stock options grants between 1997 and 2002. A special committee of Apple's board found that 15 suspect stock options grants were made involving former executives of the company, but no current members of Apple management were involved. That committee, in a report issued in October, determined that Jobs was generally aware of some of the suspect option grants, but didn't personally benefit from any of them nor was he aware of any accounting issues they created. At that time, Jobs issued an apology to Apple shareholders.
But that investigation raised "serious concerns" about the actions of two former Apple executives, the company said, and the results of the internal investigation were turned over to the SEC. The company said it will have to restate some earnings and has been in the process of determining how much it will have to charge off for non-cash compensation for some executives.
Against that backdrop, Apple is facing a delisting of its common stock on NASDAQ as early as this week if it does not file an already tardy financial report with the SEC. The stock exchange has agreed to give Apple until Friday to file with the SEC its 10-Q report for the quarter that ended July 1 -- along with any financial restatements it needs to make.
Apple has said that if it couldn't make the Friday deadline it would ask for more time. Another extension could last for several weeks. Under NASDAQ's rules, a special hearing panel that determines whether to delist a company can't grant any extensions of time beyond 180 days when NASDAQ first tells a company it could be delisted. For Apple, which first received a NASDAQ delisting warning on Aug. 11, the 180 days runs out on Feb. 7, 2007.
Apple's troubles are coming at a time when it is otherwise experiencing a strong resurgence in the U.S. IT market. Following its conversion to Intel-based systems for its Macintosh desktops and notebooks, the company has begun to experience strong market share gains. According to IDC, during the third quarter of 2006 Apple's PC market share in the U.S. jumped to 5.8 percent from 4.3 percent for the same quarter a year earlier, while rival Dell, Round Rock, Texas, saw negative growth in the U.S. and lost market share.