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Analysts: No Need For Concern Over Apple Stock Options

TMO Reports - Analysts: No Need For Concern Over Apple Stock Options

by , 1:15 PM EDT, August 4th, 2006

Analysts Shaw Wu (American Technology Research) and Gene Munster (Piper Jaffray) on Friday issued research reports in which they detailed their reactions to Apple's Thursday announcement that it is delaying its 10-Q filing and has found further evidence of stock option irregularities.

Mr. Wu wrote: "While AAPL hasn't been formally charged by the SEC or even received an informal inquiry, we do not find this update surprising and anticipate a minor impact to GAAP financials. In our analysis, stock compensation at AAPL is NOT a large component relative to its earnings and compared to most other technology companies. For example, over the last seven quarters, stock options compensation is typically $0.03 to $0.06 vs. its quarterly earnings of $0.34 to $0.65 (including options)."

He added: "More importantly, as we mentioned back in late June (see 6/30/06), we continue to believe that even in the worst case scenario where AAPL is found guilty of improper options granting, we do not believe Steve Jobs is liable, the reason being the compensation committee at AAPL is run by an independent board that is not comprised of employees of AAPL." The analyst maintained his "Buy" rating on the stock, with a US$75 price target.

Mr. Munster concurred. "From a high level," he wrote, "this issue slightly tarnishes Apple's squeaky clean image, but, more importantly, this does not impact Apple's underlying fundamentals or ongoing business and we remain positive going into the back half of 2006."

The analyst maintained his "Outperform" rating on Apple's stock, with a $99 price target. At 1:20 PM EST on Friday, the company's shares were selling for $65.54, down $4.05, or 5.82%, for the day. The stock posted gains on Thursday, but it began falling in after-hours trading, after the news of the 10-Q filing delay was released.

If you are interested in Apple's stock, join our forum members in the Apple Finance Boards, a moderated forum for Apple Investors and people who are interested in Apple's financial dealings. For other stories regarding Apple's stock activity, visit our updated Apple Stock Watch Special Report.

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