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AAPL Stock: 570.56 ( + 13.59 )

New accounting standards could reshape Apple earnings

updated 07:35 am EST, Fri April 2, 2004

AAPL accounting standards


Apple is among a list of by a decision by the Federal Accounting Standards Board to require companies to treat stock options as expenses, Reuters reports. According to Credit Suisse First Boston, had the rule been in place in 2003, Apple would have reported a loss of 27 cents per share instead of a profit of 16 cents per share, a reduction of 242 percent. Technology companies, which often dole out hefty options packages to executives, stand to be among the most affected by the new accounting standard.


by MacNN Staff

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  1. Thain Esh Kelch

    Mac Enthusiast

    Joined: May 2001

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    04/02, 07:54am | report spam | Reply |

    ....

    What does this mean for shareholders?

  1. paulc

    Junior Member

    Joined: Aug 2000

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    04/02, 08:03am | report spam | Reply |

    means...

    that what was thought of as a profitable company really isn't. Not good news.

    I had thought that they HAD switched to expensing options back when it became clear that "big business" was using this loophole to make seeming "profits" where there weren't any.

  1. Rincewind

    Fresh-Faced Recruit

    Joined: May 2000

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    04/02, 10:48am | report spam | Reply |

    it doesn't matter anymor

    Apple already bought back all of their stock options with real stock, so this doesn't really apply anymore.

  1. koolkid1976

    Fresh-Faced Recruit

    Joined: May 2003

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    04/02, 11:39am | report spam | Reply |

    re: it doesn't matter an

    "Apple already bought back all of their stock options with real stock, so this doesn't really apply anymore."

    Could you explain a little more in detail? I don't understand any of this.

  1. Feeling_Macish

    Fresh-Faced Recruit

    Joined: Mar 2004

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    04/02, 11:59am | report spam | Reply |

    What was thought of...

    as a profitable company (and this applies to ALL companies that accounted in this non-conservative way) was not thought of properly. In other words, changing the way the companies were looked at doesn't mean the companies were run wrong. People were thinking about them wrong (and there were PLENTY of economics pundits who have been pointing this out year after year - that this accounting method was flawed and outrageous). Lots of companies don't and never did account this way - they were generally not high-tech companies, probably boring, but I'm sure their shareholders are now happy they don't have to suddenly get religion about sound accounting practices...

    Shareholders in this country are by and large pathetic sheep. Just because something is said to be incorrect now, doesn't mean it wasn't incorrect THEN.

  1. Eriamjh

    Addicted to MacNN

    Joined: Oct 2001

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    04/02, 12:01pm | report spam | Reply |

    cashflow

    the only real standard.

  1. Thain Esh Kelch

    Mac Enthusiast

    Joined: May 2001

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    04/02, 12:41pm | report spam | Reply |

    ...

    So this means that my Apple stock is going to be just as much worth now as in 10 months?

  1. iomatic

    Mac Elite

    Joined: Oct 1999

    0
    04/03, 10:46pm | report spam | Reply |

    ridiculous

    Apple should go private and not be subject to public whim. With guidance based on raising shareholder equity, the balance between creating real value vs. simply raising valuation toes the line of stupidity. Look at Microsoft. The only value there is putting money into it as a stockholder, and not as an innovation. It's just a money machine, as all corporations are in all public trading markets -- companies care not about innovation, because that's the last thing an executive staff will focus on. Just shareholder value.

    US$.02, deflated.

  1. Pete_Y_48

    Fresh-Faced Recruit

    Joined: Apr 2004

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    04/04, 01:49am | report spam | Reply |

    Story Partially Accurate

    Apple has already handled the expensing problem by issuing restricted stock instead of options. Just last week, the restricted stock units were announced, and they cover the next 6 years for most major officers. The calcualated effect of the restricted stock will hit earnings starting in 2005 at $.04/year for the lot through 2007, and then $.01/year for the next 3 years.
    That's not to say that more restricted stock can't be issued over the next 6 years, and some probably will, but the option accounting problem seems to have been handled through restricted stock issuance which is much more cut and dried than options.

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