It's an accounting problem that Apple will have to work through. If they are the ones that discovered the problem then I see no real legal problems ahead.

Let's face it, there will be no changes in unit sales for anything - be it Macs, iPods, songs, you name it. The gross margins will be the same, as will the huge cash holdings. Well, the cash holdings may increase a bit - if net income goes down for some of the previous years then there will be tax refunds . . .

What this does bring forward is the need for Apple to deliver some very good product news at WWDC. Because of the similar pricing and socket compatibility of Core 2 I can see Apple shifting everything possible to Core 2 ASAP, with multiple announcements by Steve J.

To me, the smart investor will be more interested in where Apple is today and where they are going tomorrow. Core 2 at WWDC can impact the smart investor, as can a strong Leopard presentation with a lot of new features the average consumer will pay for. Follow up with new iPods in Paris and maybe even the iPhone and history will not be that important.

Well, the stock market is mostly psychological. I hope nervous investors don't erase all the gains that AAPL (and I) have made in the past two weeks

Keep in mind that AH trading is light volume--it'll be interesting to see if the funds buy up shares before Monday's WWDC conference. The market's pretty good at pricing in liabilities from things like this, and the $4B in market cap that's been erased over the last few hours is evidence of that.

Oh, and the problem is, that while options backdating is not "illegal" if properly disclosed, it does has an effect on the calculation of compensation expenses for tax purposes. In fact, my understanding is that expenses related to backdating are not deductible, meaning that the tax-man could be angry at Apple. But hopefully, it won't be signficant; and as long as these are "non-cash" adjustments to net-income, I'm not really concerned.

Worst case scenario :

The financial situation was dire back then and Apple chose to hide some money this way in order to keep enough cash in the bank and to impress investors. This way the operations could continue and money kept pouring in. Now that the situation is much better, Apple comes forward before someone else finds the trick, planing to blame the problem on the former Finance VP (it was planed anyway and he already got a nice financial compensation in return because he accepted to be publicly crucified).

This is how things were done back then, but in the light of the

Worser case scenario:

Old video is released showing Bush and Steve Jobs walking hand in hand towards Apple's corporate jet. Bush sends Jobs off with "you're doin' a heckuva job, Stevie-boy!"

Documents reveal that Jobs has been embezzling money, and all of Apple's iPod profits were sunk into a bad land deal on some S. Pacific island. Jobs hid the losses with trick accounting practices, and continued to bleed Apple dry.

Furor ensues when Jobs is named in a class action lawsuite by Apple's female employes. He is accused of inviting female workers into his office, and telling them that they would be fired unless they allowed him to give them his "iPod," and then chasing them around his office with his erect iPenis.

Haha, I love the Enron story. Have you read Conspiracy of Fools?

This whole financial thing about apple is because they use Quicken for Mac and it SUX BIGTIME!