updated 11:10 am EDT, Thu August 16, 2007
Execs indicted over iPod
Nine executives from the Taiwanese company Inventec Appliances have been indicted over insider stock trading relating to iPod orders, according to reports. The Banciao District Prosecutors Office has accused the executives, along with a lower-level worker, of deliberately withholding information on Apple's decision to reduce orders to Inventec, giving them time to sell $740 million NT of stock, equivalent to $22.4 million US. The prosecutors say that as early as January 19th of last year, executives knew iPod output would have to be cut by 49 percent as Apple directed orders to China.
Because of this, it is argued, plans for layoffs were made before it even announced the problems to investors the following March. Stock prices reached as high as $183.03 NT on February 3rd, but by March 24th, they had crashed to $106.54. Revenue had already begun to drop precipitously, falling from $12.3 billion NT in January to $6.95 billion the next month. The company has not recovered, and last reported revenue of $4.91 billion this July.
If convicted, the harshest penalties may be levelled against Chairman Jackson Chang and President Daniel Lee. Chang could be sentenced to a fine of $30 million NT and six-and-a-half years in prison, while Lee faces as much as seven-and-a-half years, plus a $60 million fine.