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Monday, August 14, 2006

SEC Wizard: Options Delisting Candidates


Perhaps the largest risk any company has in the options dating scandal is that its is eventually delisted, forcing institutional investors who have charters to sell delisted stocks to dump shares. There are, of course, other risks. Management could be dismissed. Companies might have to redo financials. There may be costs for SEC or Justice Department investigations. The IRS may force companies to pay taxes on the adjustments between original and corrected financials. But, a delisting that causes a company to lose its institutional shareholders could be the worst consequence of all.

Below is the 247 WallSt. list of a number of the companies involved in the options scandal that we think have the highest odds of being delisted.. Our analysis is based on public information from the SEC on whether companies have delayed filings, a list of non-compliant companies at the Nasdaq website, and our assessment of how serious the options-related issues are and how long each company’s filings may be delayed.

Blue Coat Systems (BCSI): The company has told the SEC that it will delay filing its 10K.

Rambus (RMBS): Second quarter results are still being reviewed and 10Q is delayed. Company has issued no date for conclusion of audit of options practices.

Integrated Silicon Solution (ISSI): Filing of 10Q delayed and company is investigating options grants back to 1995.

Microtune (TUNE): Filing of 10Q delayed and company has stated it does not think it will file by August 14 extension date. No timetable set for completing internal review.

Nvidia (NVDA): Filing of 10Q delayed. Merrill Lynch has stated problems may be more acute than with other companies since most management has been with the company since IPO.

Altera (ALTR): The company has received conditional extension to stay on Nasdaq. The company’s 10Q must be filed by September 14. Company has now announced the late filing of a second quarterly statement, placing filings for two quarters in question.

Semtech (SMTC): Restating 2002 through 2006. Company received letter from Nasdaq on June 15 saying it was out of compliance.

Brocade: (BRCD): Depth of probe and criminal charges could make process of filing final financials much more difficult.

Apple (AAPL): Has recently said it has received notice from Nasdaq that it is out of compliance with 10-Q filing deadlines. The company has not been forthcoming about the extent of its investigations.

Comverse Technology (CMVT): Criminal charges and on-going probe could make final filings of financials with SEC more difficult.

Juniper Networks (JNPR) Announced on August 11 that it had received a letter saying it was out of compliance with Nasdaq rules. The company cannot say what the duration of its options investigation might be.

Agile Software (AGIL) Company has received non-compliance notice from Nasdaq and cannot predict when options probe will end.

Apollo Group (APOL) The company is appealing a delisting notice from Nasdaq, but the company has not disclosed when it can file to get in compliance.

Meade Instruments (MEAD): Has received notice from Nasdaq but has supplied no date for end of stock option probe and compliance.

Progress Software (PRGS): Notice received by Nasdaq. Company says that it does not know when it will complete it inquiry and file financials for the periods ending May 31, 2005 and 2006.

Douglas A. McIntyre can be reached at He does not own securities in companies that he writes about.

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