Apple posts $1 Billion profit.

http://news.yahoo.com/s/ap/20070119/ap_on_hi_te/earns_apple_36

http://www.apple.com/quicktime/qtv/earningsq107

And for some reason the shareholders aren't that happy... Surveys say many investors aren't that confident in Steve Jobs.

Jeff said:

And for some reason the shareholders aren't that happy... Surveys say many investors aren't that confident in Steve Jobs.

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Because of on going scandles with options backdating and board meeting record falsification. A few high level execs have been forced to resign, and it looks like they were playing a bit of a shell game to say that Jobs never benefited from the options backdating (cancled his options then gave him what they were worth in other stock). There is an appearance that they were playing fast and loose with their financing.

I don't think that anyone is complaining about how much money they made though.

Not complaining, more like shrugging it off.

Hmm... I'm not so business savant, so can somebody, in a gist, tell me what kind of trouble steve got with Stock Options? Whose sock options? Apple Stocks?

You know what, instead of me trying to explain it, here's a link. It does a much bettter job. RedOrbit

I am pretty sure Jobs has already been cleared of any wrong doing. I could be wrong, but I don't think so.

digital john said:

I am pretty sure Jobs has already been cleared of any wrong doing. I could be wrong, but I don't think so.

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You can read in the above article about that. Basically, Apple cleared Jobs of wrongdoing, not the SEC. So Apple's statement is just so much PR spin ATM.

dan828 said:

You can read in the above article about that. Basically, Apple cleared Jobs of wrongdoing, not the SEC. So Apple's statement is just so much PR spin ATM.

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So it's still out for debate. There are a number of articals that I read that talk of Apple releasing Jobs, but I personally think that is ludicrous.

Jeff said:

So it's still out for debate. There are a number of articals that I read that talk of Apple releasing Jobs, but I personally think that is ludicrous.

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Sure, they'll only do it if forced to. I believe that there have been some cases where the SEC has brought charges against CEOs for this kind of thing, so we'll have to wait and see. Personally, I don't think that will happen, but it is pretty clear that Jobs benefitted from the whole thing, and I really don't believe that he didn't know what was going on, at least so far as his own options went, but probably for all of them awarded during this time.

What it is

For those who want a quick explanation of backdating :

Execs often get stock options, which can read something like this :

"12 months from now, and for 5 years after that, you can purchase up to 1 million shares of apple stock from apple at the price of the stock at close on the date this option is issued."


Backdating is when you write up a stock option for an exec like the above statement, and then put the 'date option issued' earlier than the current date.

ie, a clearly illegal and egregious example would be to issue such an option to an exec today (1/19) and put the issue date of the option to 6/19/06 - a date where the stock sold for $54.10

The stock today closed at $88.50. So, naturally the exec then buys a million shares from apple at $54.10, and promptly sells them on the market for $88.10 - making a net of (88.60-54.10) x 1million = 34.4 million.

This money does not grow on trees. One of two things happen :

1 - The shares apple sells are 'new' and were never on the market. The exec has now diluted the value of the stock the other shareholders hold by introducing this 1 million new shares into the market, hence effectively ripping off the shareholders of the stock.

2 - Apple had previously purchased the shares and held them as an asset. Now, it has sold its asset that was worth 88.6 million to this exec for 54.1 million, and the exec of course promptly sells them for 88.6 million. In this case, Apple effectively just paid the exec 34.4 million.

This is a very bad thing.

lonerider said:

For those who want a quick explanation of backdating :

Execs often get stock options, which can read something like this :

"12 months from now, and for 5 years after that, you can purchase up to 1 million shares of apple stock from apple at the price of the stock at close on the date this option is issued."


Backdating is when you write up a stock option for an exec like the above statement, and then put the 'date option issued' earlier than the current date.

ie, a clearly illegal and egregious example would be to issue such an option to an exec today (1/19) and put the issue date of the option to 6/19/06 - a date where the stock sold for $54.10

The stock today closed at $88.50. So, naturally the exec then buys a million shares from apple at $54.10, and promptly sells them on the market for $88.10 - making a net of (88.60-54.10) x 1million = 34.4 million.

This money does not grow on trees. One of two things happen :

1 - The shares apple sells are 'new' and were never on the market. The exec has now diluted the value of the stock the other shareholders hold by introducing this 1 million new shares into the market, hence effectively ripping off the shareholders of the stock.

2 - Apple had previously purchased the shares and held them as an asset. Now, it has sold its asset that was worth 88.6 million to this exec for 54.1 million, and the exec of course promptly sells them for 88.6 million. In this case, Apple effectively just paid the exec 34.4 million.

This is a very bad thing.

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One thing to note, so long as they are above board about it it's OK. What I mean is that they tell everyone (shareholders) that they are issuing X number of shares at the price they were an X date, and then account for the money properly (in the above example that would be taking a 34.4 million dollar charge). Otherwise, as you noted, you end up compensating the executive out of the pockets of the shareholders.

I can only hope for another stock split. 80 shares, here I come!

I was hoping for a split when it was at $96 but it dropped even though their earnings report was phenominal. It it drops any further I will probably buy more shares before it jumps back up.

i personnally am a small time investor, just dabbling in apple and the "other" software co. stocks. wish i could put more in there but my wife and i don't have that much liquid assets to use.

i think steve needs to get a slap on the wrist for this but not let go from apple............unless there is more here than the public was told.

scooter said:

i personnally am a small time investor

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I remember I was just dabbling with the stock market and invested in Apple. Probably the best financial decision I have ever made. I have now seen the power of appreciation and compounding. I make sure all my money is working for me now.