Apple (AAPL) Backdating Scandal Could Still Wreak Havoc

Investing

Published: July 13, 2008 7:29 am

Apple (AAPL) may be one of the most successful companies in the world. Over the last five years, the value of the firm’s shares is up almost 1,600%. Most of that is due to the launch of the iPod and improvements in the Mac. Whether the iPhone will have similar financial success remains to be seen.

Over the last two years, Apple has had a constant companion to go with its success: accusations that the company backdated stock options. That problem has not gone away, and, it may be about to get somewhat worse. According to The New York Times: "A CLASS-ACTION lawsuit contending securities fraud and filed last month may force the Apple board to pay some attention." The Justice Department is still probably looking into the matter.

Working to resolve the issue with the government may turn out to be much easier than fending off class action suits. The US Attorney may drop its investigation altogether.

Some Apple shareholders look at the options backdating lawsuits as a way to get much more money out of the company than they made on their investments in stock. With $20 billion in cash and securities on its balance sheet, the options issue may make Apple a target for a long, long time.

Douglas A. McIntyre

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