The Feds have finally gained some traction in their probe of Apple’s backdating problem. The SEC has settled claims against former Apple CFO Fred Anderson and has filed charges against former general counsel Nancy Heinen.
Anderson will have to pay a fine of $150,000 and repay options gains of $3.5 million, but he doesn’t admit to any wrongdoing and he’ll be able to work in the financial markets as an officer of a public company without taint or restrictions. The charges against Heinen will move forward.
Anderson, however, wasn’t let off the hook easily. Not only did he have to cough up money, he had to point a finger of blame at Apple’s golden CEO Steve Jobs, who has claimed ignorance about the financial impropriety of Apple’s options backdating. In a statement issued by his lawyer, Anderson claims that he warned Jobs about fixing a date on the executive options (of which Jobs himself was a beneficiary), which had the net effect of boosting the top executives’ compensation while understating company expenses. Anderson also implies that Jobs misled him about board approval of the backdated options.
Clearly the SEC is salivating at the glory-grabbing prospect of reeling in a big fish such as Steve Jobs, and Anderson’s statement was no doubt a part of the deal. The GS-14 enforcement attorneys at the SEC are bolstering their public case for going after an icon, a superstar, a formerly untouchable executive. This is the biggest thing that has EVER happened to them and they’re very excited.
But, when it comes to scandals, options backdating is a total snoozer. I can’t get excited about Anderson’s statement anymore than I can about the whole backdating issue. Aside from the fact that it was probably coerced out of Anderson as part of his deal, does anyone (outside the SEC) think that Steve Jobs would have ignored a warning from Anderson because he was greedy? Because he wanted more money?
More than likely, Jobs wasn’t paying attention to the blah, blah, blah about the options dates or board approval stuff that Anderson was prattling on about because, as I said, it’s utterly boring. That’s not a great thing to say about a CEO of a major corporation, that he can’t focus on crucial financial minutiae, but it’s also, probably, not an indictable crime.
Although Apple’s backdating story now has real legs because for the first time someone has pinned some blame on Jobs, I suspect that investors will continue to ignore the miniscule threat of Apple losing Jobs due to this donnybrook. At least I hope they do because there really isn’t anything interesting about backdating.
Posted by Cynthia Brumfield at 3:51 PM | Print | Comments (1)
At last some good news for Vonage: The U.S. Court of Appeals for the Federal Circuit in Washington D.C. today gave Vonage a permanent stay of an earlier court injunction that would have barred it from signing up new customers. A District Court judge in Alexandria had barred Vonage from signing up new subscribers as part of a ruling in Vonage’s big patent infringement fight with Verizon.
This latest twist in the saga of Vonage’s struggle to survive allows the company to continue signing up new customers until its appeal of the earlier decision has been heard and decided. It’s quite possible that when all is said and done, Vonage may end up in the same boat — but at least the troubled VoIP provider has been thrown a lifesaver that will keep it afloat (maybe) for at least, oh, another two years or so as the appellate process slowly grinds away.
Vonage, however, is confident it will win on appeal. Vonage EVP and chief legal officer Sharon O’Leary said in a statement:
We believe the original verdict was based on an erroneous claim construction — meaning the patents in this case were defined in an overly broad and legally unprecedented way…We are confident this error will be rectified by the appeals court, which hears intellectual property cases exclusively. As a result, we remain highly confident Vonage will prevail on appeal.Posted by Cynthia Brumfield at 2:13 PM | Print | Comments (0)
Telco giant AT&T issued its Q1 07 earnings report this morning showing relatively flat revenues, healthy growth in profits and a mixed performance for its high-growth broadband and wireless products. Revenues for the telco stayed relatively flat at $28.97 billion while net income jumped 46% year-over-year to $2.9 billion.
(Note: AT&T still has the annoying habit of not releasing key financials on an apples-to-apples basis, despite the fact that over the past two years SBC absorbed AT&T, BellSouth and Cingular Wireless to form the new AT&T. Some press reports repeat company statistics that compare a combined AT&T-BellSouth for Q1 07 to only AT&T alone for Q1 06, and tend to show much bigger growth as a consequence. All numbers presented in the table below are apples-to-apples, i.e. the data assumes a combined AT&T-BellSouth for all quarters.)
Even as AT&T continued to lose local access lines at a rate of about one million per quarter, the company posted very healthy gains in broadband. Total broadband subscribers jumped by 691,000 to reach 12.9 million by quarter’s end, a run rate that tops every preceding quarter of the year. Most of these gains were of the garden variety DSL kind, although AT&T’s new high-speed option, U-verse High-Speed Internet, which is available only to U-verse customers, jumped by 10,000, comporting with the 10,000 net U-verse TV customer net additions.
U-verse TV, has as been already widely reported, hit the 13,000 customer mark by the end of the quarter and now reaches 20,000 customers, highlighting an accelerating take-rate for the controversial IP-based video service. Installs have hit 2,000 per week and company execs said during the earnings call that they expect U-verse installs to ramp up to 10,000 per week by year-end.
At year-end 2006, the fiber-to-the-node U-verse network had been built out to a little over 2 million homes by year-end 2006, and is now built out to around 3 million homes and will reach 8 million homes by year-end 2007, CFO Rick Lindner said during the earnings call. However, AT&T is marketing to only 25% to 30% of the homes with U-verse TV capability, he noted.
Assuming that 25% of the 3 million capable homes are being marketed today, AT&T’s current U-verse TV subscriber count, 20,000, is roughly 3% of homes marketed, a slow-start for a service that AT&T hopes will achieve 25% penetration by 2011.
The other high-growth prospect for AT&T, wireless service, seems to have hit a bit of a lull during the quarter. AT&T Wireless added 1.3 million net new wireless customers during the quarter, about one million less than the service added during Q4 06. This slow-down is a surprising, although possibly anomalous, drop-off, given that one motivation behind the AT&T-BellSouth merger was to gain momentum in the wireless field by putting Cingular, formerly owned jointly by both companies, under one corporate umbrella.
| AT&T Key Statistics | |||||
| 1Q06 | 2Q06 | 3Q06 | 4Q06 | 1Q07 | |
| Total access lines (mil.) | 70.00 | 68.66 | 67.53 | 66.47 | 65.43 |
| DSL customers (000) | 10,576 | 11,047 | 11,597 | 12,161 | 12,842 |
| Quarterly adds (000) | na | 471 | 550 | 564 | 681 |
| Consumer DSL Lines (000) | 8,841 | 9,255 | 9,750 | 10,269 | 10,899 |
| % of consumer primary lines | 27.70% | 29.50% | 31.30% | 31.50% | 33.70% |
| Consumer Quarterly adds (000) | na | 414 | 495 | 519 | 630 |
| AT&T U-Verse High-Speed Internet (000) | - | 1 | 3 | 3 | 13 |
| Satellite Broadband (000) | - | - | 4.0 | 5.0 | 6.0 |
| Total Broadband (000) | 10,576 | 11,048 | 11,604 | 12,170 | 12,861 |
| Quarterly adds (000) | na | 472 | 556 | 566 | 691 |
| Video Customers (000) | 1,180 | 1,280 | 1,400 | 1,510 | 1,697 |
| Net Adds | na | 100 | 120 | 110 | 187 |
| Satellite Video | 1,180 | 1,280 | 1,397 | 1,507 | 1,684 |
| U-Verse Customers (000) | - | 1 | 3 | 3 | 13 |
| Video Penetration of Consumer Primary Lines | 3.5% | 3.8% | 4.2% | 4.6% | 5.2% |
| Wireless Voice Customers (mil.) | 55.8 | 57.3 | 58.7 | 61.0 | 62.2 |
| Quarterly adds (mil.) | na | 1.5 | 1.3 | 2.3 | 1.3 |
| Wireless Data Subs (mil.) | 25.4 | 26.5 | 30.3 | 32.2 | 33.4 |
| Wireless Revenues (bil.) | $ 8.0 | $ 8.3 | $ 8.7 | $ 8.8 | $ 9.1 |
| Total operating revenues (mil.) | $28,900 | $29,204 | $29,392 | $29,558 | $28,969 |
| Net Income | $ 1,953 | $ 1,674 | $ 2,220 | $ 2,204 | $ 2,848 |
| Source: Emerging Media Dynamics Inc. analysis of company data. (c) 2007. | |||||
Posted by Cynthia Brumfield at 11:24 AM | Print | Comments (0)
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