By now we’ve all heard the news circulating around the proverbial water cooler about Apple’s accounting irregularities. Yes, Apple (along with about 80 other companies) has been pushing the envelope when it comes to accounting for stock options – a severely complicated and intensely debated “grey area” issue even for accountants. But what’s all the fuss about? Seriously, I don’t get it.
Everywhere I looked the past few days I saw nothing but news about Apple’s threat of being delisted from the NASDAQ. Why do I think this is about as exciting as the WWDC (sorry, it was kind of a letdown this year)? Because Apple won’t be delisted. Not only will it not be delisted, but I also highly doubt that even the news of the threat will effect the affect the long-term stock price.
The biggest reason why I don’t think this news is a big deal is because of the context of Apple’s situation. Most companies are delisted from the NASDAQ (or other exchanges) for failing to meet share or market cap requirements (i.e. at least 750,000 public shares worth $5 million). In the case of Apple, NASDAQ has threatened to delist it because its quarterly report has been delayed. But why has it been delayed you ask? To FIX the accounting problems associated with stock option grants! This is a good thing!
In fact, normally the biggest consequence of being kicked of the NASDAQ is not the loss in investors, but rather the loss of investor confidence. However, in this case the investors should be ecstatic that Apple is taking the time to fix the accounting irregularities now before they got out of hand.
Oh, and we can’t forget that Apple has requested a hearing regarding the threat of delistment – something that is likely to last much longer than the time it will take Apple to restate its earnings.
So the next time you read about the trouble Apple is in, just remember that Apple is in arguably the best financial health since its beginning. No, Apple isn’t perfect. But it isn’t a bad time to be an Apple investor either.