Apple likely to restate income after inquiry

Apple will probably restate earnings after an internal investigation into options backdating found additional suspicious grants.

It delayed its quarterly filing with regulators while it conducted a review. Apple said it had not determined the size of the charge would likely take to account for stock options, or which periods needed restating.

Apple is among the most prominent companies embroiled in the stock-option scandal that has unfolded across Silicon Valley. In June, Apple said it was investigating its stock-option grants from 1997 to 2001 and said one of them included chief executive Steve Jobs. That announcement caused the stock to drop 2.9 per cent the next day.

"The sooner we get it behind us the better," said Jonathan Hoopes, an analyst at ThinkEquity Partners in New York. He has a "buy" rating on the stock and doesn't own it. "What I do like is that they are doing this quickly."

"The investigation is ongoing. We're focused on resolving the matter as soon as possible," Apple spokesman Steve Dowling said. The company would not be commenting further until the investigation was concluded.

Apple on July 19 reported third-quarter profit rose 48 per cent, citing higher sales of Macintosh computers and iPod music players. Net income rose to US$472 million ($763 million), or 54 cents a share, and sales gained 24 per cent to US$4.37 billion.

Shareholder lawsuits, filed in California after Apple announced its investigation, claim Jobs benefited from a 7.5 million share grant issued on January 12, 2000. Although Jobs cancelled the options in 2003, Apple compensated him with 10 million restricted shares, the suits say.

Federal investigations have ensnared more than 80 companies including UnitedHealth Group and Home Depot and may involve dozens more, according to US officials, securities lawyers and executive-pay specialists. The probe has turned into the country's biggest investigation of corporate malfeasance since an inquiry into improper mutual-fund trading three years ago led to US$4.3 billion in penalties.

Stock options enable holders to buy a specified number of the company's shares at a later date.

- BLOOMBERG