Sun, Aug 13, 2006 - Page 11 News List

Apple to seek NASDAQ hearing after violation charge

BLOOMBERG

Apple Computer Inc. will seek a hearing before the NASDAQ Stock Market after being told a delay in filing a quarterly report violates listing requirements.

The company submitted documents on Friday to regulators delaying the third-quarter filing and reiterated it may restate earnings after a probe of options backdating found suspicious grants. The shares will continue to trade on the NASDAQ, Cupertino, California-based Apple said in a statement.

Apple is among the most prominent companies embroiled in a stock-option scandal, with more than 100 businesses saying they are the subject of government or internal reviews. The company, maker of Macintosh computers and iPod music players, said in June it was investigating grants from 1997 to 2001, including one to Chief Executive Officer Steve Jobs.

The filing for the quarter ended July 1 will be postponed until the review is complete, Apple said on Friday in documents to the US Securities and Exchange Commission. Apple said Aug. 3, and repeated on Friday, that it hasn't determined the size of the charge it will likely take to account for options or what periods may require restatement.

Shares of Apple initially fell on Friday after the SEC filing raised concern there may be a revision to the third-quarter earnings reported on July 19.

The company's statement that there will be "significant increases in the company's revenue and expenses," doesn't mean a restatement is certain, Bill Shope, an analyst with JP Morgan Securities in New York, said in a note.

The filing was "not a signal that results will differ from the recent earnings release," Shope wrote on Friday.

Apple said last month third-quarter profit rose 48 percent on orders for Macs and iPods. Net income rose to US$472 million, or US$0.54 a share, as sales gained 24 percent to US$4.37 billion.

Shares of Apple fell US$0.42 to close at US$63.65 in NASDAQ Stock Market composite trading. They have declined 11 percent this year.

Apple, with a market value of US$54.1 billion, is the ninth-largest company listed on NASDAQ. On average, more than 23 million shares of the company change hands each day, making it the eighth most active stock in the NASDAQ-100 Index that tracks the largest companies listed at the exchange.

About 13 NASDAQ-listed companies that are conducting internal probes into executive options grants have received de-listing notices, according to data on NASDAQ's Web site.

Apple said on June 29 that an internal investigation showed the company may have manipulated stock-option grants to benefit executives. Stock options allow recipients to buy shares at set prices on future dates. They're usually granted to executives as part of annual compensation and set at the current market price, giving managers an incentive to make the stock rise over time.

The US government is examining whether some companies falsified the dates on which the options were granted to coincide with low stock prices. Apple isn't among those being scrutinized by the government.

The meeting with the NASDAQ Listing Qualifications Panel is "procedural," Apple spokeswoman Katie Cotton said in an interview. "We're focused on resolving this matter as quickly as possible."

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