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Wednesday, October 11, 2006

Is There Another Shoe At Apple?

Stocks: (AAPL)(GOOG)(NOVL)

Apple's options probe is not itself the subject of a probe. The three directors who looked into back-dating issues at Apple have issues themselves. Jerome York, former CFO of IBM, ran the committee that granted the options. He was basically investigating himself to some degree. Another member of the investigating committee is Google CEO Eric Schmidt. Novell, another company he ran, has its own options back-dating investigation. Whether the probe will involve him directly at some point is unclear.

What is clear about the Apple probe is that the company has been less than forthcoming on several fronts. First, it announced that there was a probe. Later, the probe caused a delay of the company's financial filings with the SEC. Then, the former CFO, a board member, resigned, and Apple admitted that CEO Steve Jobs knew about the tainted grants.

And, by the way, federal prosecutors are looking into the Apple grant matter.

Apple is compounding its problems by releasing news that makes the options issues look worse each time there is word about the investigation. It raises the question of who will be caught or implicated next. Will it be board members? Is Jobs out of the woods or is the issue of his involvement still open?

Enough is enough. If there is another shoe to drop at Apple, it should drop soon. Investors are getting nervous.

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

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