Maybe it's because everyone loves the iPod. It's interesting that Apple Computer's stock-option grant scandal, which
Forbes says is potentially Enron-big, has had little, if any effect on the
company's stock price. On June 29, Steve Jobs said an internal investigation uncovered irregularities in the reporting of backdated stock options. The stock fell 2.9 percent, then recovered in July,
to close at $69.59 on Aug 3. The next day, Apple said it would "likely" need to restate its financial results as far back as 2002, and would not be able to report its third-quarter earnings as
scheduled. Despite being plastered on the cover of the business section of nearly every major newspaper, Apple's stock fell just 1.85 percent Friday, closing at $68.30. Why are shareholders letting
Apple off the hook?
Forbes says that while backdating has a big bad rap, it has a minimal effect on shares. Sixty-five firms have recently announced financial restatements due to their
stock-option-granting practices; their average share price decline is just 7.4 percent since the announcements. Investors usually take a wait-and-see approach, because they don't know who in the
company will be prosecuted, who will be sued, who will resign, etc. For many firms, backdating is simply a historical problem--a residue from the late 1990s. Often, nothing significant happens. But if
Enron is any guide, these investigations could take years.
Read the whole story at Forbes.com »
