Analysts Shaw Wu (American Technology Research) and Gene Munster (Piper Jaffray) on Friday issued research reports in which they detailed their reactions to Appleis Thursday announcement that it is delaying its 10-Q filing and has found further evidence of stock option irregularities.
Mr. Wu wrote: "While AAPL hasnit 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 Appleis squeaky clean image, but, more importantly, this does not impact Appleis underlying fundamentals or ongoing business and we remain positive going into the back half of 2006."
The analyst maintained his "Outperform" rating on Appleis stock, with a $99 price target. At 1:20 PM EST on Friday, the companyis 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.