Comments on: An honest options problem http://www.macalope.com/2006/11/02/an-honest-options-problem/ Full of sound and furry Mon, 19 Dec 2011 18:20:28 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: The Macalope » Blog Archive » Options are fun when you get a friend to play! http://www.macalope.com/2006/11/02/an-honest-options-problem/#comment-592 The Macalope » Blog Archive » Options are fun when you get a friend to play! Tue, 07 Nov 2006 01:59:05 +0000 http://www.macalope.com/?p=90#comment-592 [...] Sponsored by << An honest options problem Shorter Douglas McIntyre of 24/7 Wall St. >> 4 Nov 2006 Options are fun when you get a friend to play! Posted in Apple Corporate, Mac Blogs by Macalope at 2:58 pm | [...] [...] Sponsored by << An honest options problem Shorter Douglas McIntyre of 24/7 Wall St. >> 4 Nov 2006 Options are fun when you get a friend to play! Posted in Apple Corporate, Mac Blogs by Macalope at 2:58 pm | [...]

]]> By: Macalope http://www.macalope.com/2006/11/02/an-honest-options-problem/#comment-591 Macalope Sun, 05 Nov 2006 06:09:40 +0000 http://www.macalope.com/?p=90#comment-591 Given two companies that are exactly the same in all regards except one has admitted it has a problem with option backdating and one says it has no backdating problem, the one that has admitted the problem is going to have a lower share price. Given two companies that are exactly the same in all regards except one has admitted it has a problem with option backdating and one says it has no backdating problem, the one that has admitted the problem is going to have a lower share price.

]]> By: Ron http://www.macalope.com/2006/11/02/an-honest-options-problem/#comment-590 Ron Sat, 04 Nov 2006 02:27:21 +0000 http://www.macalope.com/?p=90#comment-590 I didn't say the stock decline wasn't related. But the stock did bounce back close to the 52 week high. You're implying that if it weren't for these irregularities, it would be even higher and there is no way you can know that. Maybe some of the bounce back was due to investrs who sold buying back in. Maybe not. The important point here is that you're drawing a conclusion you can't prove. I didn’t say the stock decline wasn’t related. But the stock did bounce back close to the 52 week high. You’re implying that if it weren’t for these irregularities, it would be even higher and there is no way you can know that. Maybe some of the bounce back was due to investrs who sold buying back in. Maybe not.
The important point here is that you’re drawing a conclusion you can’t prove.

]]> By: Macalope http://www.macalope.com/2006/11/02/an-honest-options-problem/#comment-589 Macalope Fri, 03 Nov 2006 20:12:30 +0000 http://www.macalope.com/?p=90#comment-589 Spare the Macalope. At the end of June Apple announced that it had discovered stock option irregularities and its stock went into a two week slide. In August it announced it was delaying its SEC filing because it would have to restate earnings. Shares dropped 1.85%. Fine. You can't completely untie the reasons for every stock sale. But please. Spare the Macalope.

At the end of June Apple announced that it had discovered stock option irregularities and its stock went into a two week slide.

In August it announced it was delaying its SEC filing because it would have to restate earnings. Shares dropped 1.85%.

Fine. You can’t completely untie the reasons for every stock sale.

But please.

]]> By: Ron http://www.macalope.com/2006/11/02/an-honest-options-problem/#comment-588 Ron Fri, 03 Nov 2006 19:38:16 +0000 http://www.macalope.com/?p=90#comment-588 "Apple’s stock would be higher than it is right now..." Speculation. You can't prove that statement. “Apple’s stock would be higher than it is right now…”

Speculation.
You can’t prove that statement.

]]> By: Macalope http://www.macalope.com/2006/11/02/an-honest-options-problem/#comment-587 Macalope Fri, 03 Nov 2006 18:14:58 +0000 http://www.macalope.com/?p=90#comment-587 Well, the Macalope's personal assessment is the same as yours. He won't be joining any lawsuits. But he can tell you that the big money players - the pension fund and the mutual fund managers - don't look at it the same way we do. They want that information when it's supposed to be reported and if they have to squeeze it out of Steve Jobs personally, that's what they'll try to do. But this isn't a crystal ball. This issue has cost Apple shareholders *now*. Apple's stock would be higher than it is right now and they now have to deal the uncertainty of not knowing what kind of hit the company has to take. The Macalope doubts the shareholder lawsuits would seek to remove Jobs. What they want is for him to return the money. Nobody has a problem with compensating Steve (well, some people do, but that's a different problem, really). But backdating is a really poor vehicle to use. If you want to hand him money, give him a bonus (or a salary!) and mark it up for the tax hit he'd take. Otherwise tie his compensation to the stock performance like everyone thought it was. Well, the Macalope’s personal assessment is the same as yours. He won’t be joining any lawsuits. But he can tell you that the big money players – the pension fund and the mutual fund managers – don’t look at it the same way we do. They want that information when it’s supposed to be reported and if they have to squeeze it out of Steve Jobs personally, that’s what they’ll try to do.

But this isn’t a crystal ball. This issue has cost Apple shareholders *now*. Apple’s stock would be higher than it is right now and they now have to deal the uncertainty of not knowing what kind of hit the company has to take.

The Macalope doubts the shareholder lawsuits would seek to remove Jobs. What they want is for him to return the money.

Nobody has a problem with compensating Steve (well, some people do, but that’s a different problem, really). But backdating is a really poor vehicle to use. If you want to hand him money, give him a bonus (or a salary!) and mark it up for the tax hit he’d take. Otherwise tie his compensation to the stock performance like everyone thought it was.

]]> By: Buster http://www.macalope.com/2006/11/02/an-honest-options-problem/#comment-586 Buster Fri, 03 Nov 2006 17:55:16 +0000 http://www.macalope.com/?p=90#comment-586 That's all fine and good, Macalope, but the point is *harm*. I won't join the lawsuits because I made out like a friggin' bandit on AAPL. I dispute the basic premise that AAPL shares would have somehow been affected because of information Steve Jobs may or may not have had at the time. And even if the case could be made, so what? Who has a crystal ball that can tell us where AAPL *should be* right now if the information had become public back then? The point was, is, and always will be that Steve Jobs has added (roughly) $60 billion in value to AAPL. Is that worth $85 million and a $40 million jet? Not only yeah, but hell yeah! And judging by AAPL's price, I think the market backs me up on this one... That’s all fine and good, Macalope, but the point is *harm*. I won’t join the lawsuits because I made out like a friggin’ bandit on AAPL. I dispute the basic premise that AAPL shares would have somehow been affected because of information Steve Jobs may or may not have had at the time.

And even if the case could be made, so what? Who has a crystal ball that can tell us where AAPL *should be* right now if the information had become public back then? The point was, is, and always will be that Steve Jobs has added (roughly) $60 billion in value to AAPL. Is that worth $85 million and a $40 million jet? Not only yeah, but hell yeah! And judging by AAPL’s price, I think the market backs me up on this one…

]]> By: Macalope http://www.macalope.com/2006/11/02/an-honest-options-problem/#comment-585 Macalope Fri, 03 Nov 2006 17:41:51 +0000 http://www.macalope.com/?p=90#comment-585 <blockquote>How is it possible to “overvalue” a stock when the price of said stock has gone up around $22 per in the time frame in question?</blockquote> Great, Apple's stock has done really well. But they still haven't accounted for this. They're going to have to take a hit in a future period (possibly and hopefully the current period just to get this over with) and take a charge that will reduce their profit. This charge should have been taken at the time the options were granted or appropriately documented. Apple understated its liability to Steve Jobs and the others that received backdated options, making the company appear to be in better condition than it was. The stock has already taken some of the hit from the news that Apple will have to restate its books. It's doing well now in spite of that because iPod sales are still strong, Mac sales are up and people believe the company has a future. But it would be doing better if it has properly accounted for these options. The point here is information. Steve Jobs had information that other shareholders should have had but did not. The Macalope's not talking about trade secrets like the details of the iPhone - he's talking about what is rightly public information for a publicly traded company.

How is it possible to “overvalue” a stock when the price of said stock has gone up around $22 per in the time frame in question?

Great, Apple’s stock has done really well. But they still haven’t accounted for this. They’re going to have to take a hit in a future period (possibly and hopefully the current period just to get this over with) and take a charge that will reduce their profit. This charge should have been taken at the time the options were granted or appropriately documented. Apple understated its liability to Steve Jobs and the others that received backdated options, making the company appear to be in better condition than it was.

The stock has already taken some of the hit from the news that Apple will have to restate its books. It’s doing well now in spite of that because iPod sales are still strong, Mac sales are up and people believe the company has a future. But it would be doing better if it has properly accounted for these options.

The point here is information. Steve Jobs had information that other shareholders should have had but did not. The Macalope’s not talking about trade secrets like the details of the iPhone – he’s talking about what is rightly public information for a publicly traded company.

]]> By: Buster http://www.macalope.com/2006/11/02/an-honest-options-problem/#comment-584 Buster Fri, 03 Nov 2006 13:48:02 +0000 http://www.macalope.com/?p=90#comment-584 How is it possible to "overvalue" a stock when the price of said stock has gone up around $22 per in the time frame in question? Try as I might, I just can't see how people who held the stock during the backdating (me included) can cry a river over any "loss". Personally, my laughing all the way to the bank after reaping $10+ per share drowned out the sound of my crying over this issue. I don't know how the people who have already filed lawsuits will prove "harm" if they made out half as well as I did. How is it possible to “overvalue” a stock when the price of said stock has gone up around $22 per in the time frame in question? Try as I might, I just can’t see how people who held the stock during the backdating (me included) can cry a river over any “loss”.

Personally, my laughing all the way to the bank after reaping $10+ per share drowned out the sound of my crying over this issue. I don’t know how the people who have already filed lawsuits will prove “harm” if they made out half as well as I did.

]]> By: BarakTheCat http://www.macalope.com/2006/11/02/an-honest-options-problem/#comment-583 BarakTheCat Fri, 03 Nov 2006 11:47:17 +0000 http://www.macalope.com/?p=90#comment-583 Whoa . . . where am I? Whoa . . . where am I?

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