Options scandals are becoming almost routine this year. More than 60 companies, most of them flagging tech stocks, have been subject to investigation by the Securities and Exchange Commission. I now gloss over the headlines most of the time. Oh, another one, I think. Figures.
But Apple? Can it be true? Apple is supposed to stand for all that is good in corporate America -- great products, happy customers, cool designs, top-notch service and a capacity to care about more than money-grubbing for pure profits.
Now this. Apple Computer (NASDAQ: AAPL)has announced it will likely have to restate financial results due to its mispricing of stock options. Not only could profits from past years be erased, but investors are likely to sue. One has already emailed us at Blogging Stocks to report that he plans to "sue the living daylights out of them."
The real blow to the stock -- which has climbed $20 in just the past three weeks -- will be to the company's image. I predict the stock will be hurt by more than the pure number-crunching estimates Wall Street comes up with for how earnings per share could be affected.
I think plenty of individual investors, who put their personal faith in Steve Jobs and were willing to overlook the problem after his earnest and straightforward revelations in June, will now feel burned. They may take their profits and run. As the emailer above wrote, "I am furious at the directors and senior officers at Apple for this outrageous disclosure of options."
Apple shares are down just $2.64, and trading at $66.95 as I write this at 9:50 a.m. I think there is likely more pain coming. Stocks are rallying big across the board today on the weak jobs report since it indicates that the Fed may not have to keep raising rates. But Apple's bad news will take some time to sink in and investors will be reminded of it plenty of times in the weeks to come.