Wednesday, August 16, 2006, 11:00 am PT (02:00 pm ET)
Jobs' implication in Apple options scandal still unclearWhile some Wall Street analysts have suggested Apple chief executive Steve Jobs is likely to be cleared of any wrongdoing when it comes to the company's backdated stock option grants, analysts at Merrill Lynch are taking a more cautious approach.
In a research note sent to clients on Wednesday, analyst Richard Farmer said recent discoveries from ongoing investigations into Apple grant problems are reflecting poorly on the integrity of the mangers involved.
But the analyst said Apple has yet to provide enough information for his team to accurately asses the probability that the results of the investigation will trigger management changes. Therefore, Farmer said, he cannot at this time rule out such risks, including the possibility that Jobs may be implicated.
"We believe grants to more than one executive have been discovered to be irregular; however, no executives have yet been specified by Apple beyond the previous identification of one grant to Steve Jobs which was later cancelled in conjunction with a valuation process that converted all his option holdings to restricted stock," Farmer told clients.
"It is not clear whether the measurements applied in that valuation process effectively eliminated the mismeasurement of the value of the original grant that is now being scrutinized or if some mismeasurement persisted to influence the translation to restricted stock," the analyst added.
Despite the negative developments in the options investigation, Farmer said his forward looking view of the company's fundamentals will not be affected, so long as disruptive management changes are not required.
Merrill Lynch maintains a "Buy" rating on Apple shares with a price target of $72.
On Topic: General
- Apple to open 12th Chinese retail store in Wuxi's Center 66 mall next week
- Apple's e-wallet could debut as soon as this fall, possibly with 'iPhone 6'
- Apple hit with class action lawsuit over alleged labor violations, more than 20K plaintiffs involved
- Apple completed 29 acquisitions in past nine months, not including Beats
- NBA star Kobe Bryant discusses day with Apple's Jony Ive set up by simple cold call