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Standards board changes subscription accounting rules, Apple CPAs drunk with power

by Nilay Patel posted Sep 25th 2009 at 4:52PM

We'd heard Apple was pushing the Financial Accounting Standards Board to change the rules by which Cupertino's accountants reported iPhone and Apple TV revenue, and it looks like the effort was successful. The new rules allow Apple (and other companies like Palm) to report revenues on products that bundle hardware and software all at once, instead of parceling out the revenue over time using subscription accounting to enable free software upgrades. For investors, that means Apple's quarterly earnings reports will more accurately reflect the state of the company's cash flow, but we're more interested to find out if this means iPod touch OS updates will be free now, since the previous rationale for charging was that iPod revenue wasn't recorded using subscription accounting. We've got a feeling Apple's all too happy to take your $4.95, but we can hope, right?

[Via MacRumors]

Blockbuster plans to part with 960 retail stores by end of 2010

by Ross Miller posted Sep 15th 2009 at 8:32PM

Seriously, Blockbuster can't seem to get a break. In a recent SEC filing, the company identified 18 percent of its retail outlets it deemed unprofitable and announced plans to close up to 960 stores by the end of 2010. That's divided into up to 685 by the end of this year and the remaining 275 the year after, but the filing continues to say that up to 1,560 locations, or 22 percent of its total retail coverage, could end up falling the wayside. Another slide indicates how the company sees itself going forward, with an expansion of kiosks and its Total Access subscriber base, and putting OnDemand in "nearly every connected device." Of course, if this brings Blockbuster back to profitability as it expects to be, then more power to it, but it's clear that the one-time king is fighting wars on a number of sides and has a long way to go if it intends to stay afloat, much less reclaim its crown.

[Via CNET]

Apple pushes to change subscription accounting rules

by Nilay Patel posted Sep 14th 2009 at 6:58PM

Apple's pretty famous for using subscription accounting for the iPhone and Apple TV as a way to bend the rules and offer free software updates after purchase -- basically, instead of putting all the money from the sale on the books at once, the company's accountants spread the revenue out over two years, extending the "transaction" to cover upgrades. That's great for iPhone owners, but it's not so great for Apple or its investors, since the company's stock price doesn't always reflect the true amount of iPhone money coming in -- in fact, Apple earnings reports now include a second, unofficial balance sheet that does away with subscription accounting to show off the real numbers. Yeah, it's confusing, but it might finally be about to change, since the Financial Accounting Standards Board just tentatively approved new rules that could allow Apple to do away with subscription accounting and still deliver free updates. That means Apple's quarterly earnings will now feature much larger official revenue and profit figures -- last quarter's official revenue was $8.34 billion, while the unofficial number was $9.74 billion -- the lawyers and accountants will be happy, and we'll still get free iPhone updates. Good deal all around -- except for iPod touch owners, who will still have to pay $9.95 and not get a camera.

[Via Yahoo]

Blockbuster voices "substantial doubt" about ability to survive

by Darren Murph posted Apr 7th 2009 at 11:04AM

As depressing as it is to see an American icon come this close to collapse, is it really any surprise? While the world kept turning, Netflix kept reinventing itself and movies found their way onto the internets (legally), Blockbuster sat still... and that's putting things nicely. Sure, it tried the whole movie set-top-box thing, but no on will argue that it went about things the wrong way. In a recent SEC filing, the company made perfectly clear that there was serious risk that it wouldn't be able to refinance its crushing debt load in order to stay afloat for a wee bit longer; in fact, it noted that said quandary raised "substantial doubt" about its "ability to continue." 'Course, hampering its Total Access rental plan and promising less stock in-store doesn't exactly sound like a brilliant plan to be successful, but maybe yesterday would be the best time to completely revolutionize its business and go online only. Just an idea, is all.

Intel threatens AMD with termination of x86 license within 60 days

by Nilay Patel posted Mar 16th 2009 at 1:14PM

Intel's been making noise about AMD's Globalfoundries manufacturing spinoff potentially violating the two companies' patent cross-licensing agreement for a while now, and it looks like things are escalating: AMD's latest SEC filing says that Intel's formally threatened to terminate the license if AMD doesn't make it better within 60 days. It's not clear exactly what Intel wants here -- we doubt anyone thinks AMD is going to undo the spinoff -- so we'll see what happens next, but we've got a feeling Intel's trying to put the boot down while AMD's on the ground.

[Thanks, Chris]

Read - Reuters
Read - AMD SEC filing

Roger McNamee's wild predictions shot down -- by Palm itself

by Tim Stevens posted Mar 10th 2009 at 7:12AM

Remember wild-man McNamee's predictions last week of death to the iPhone and all sorts of other Pre-related wonderment? We read and we chuckled and we moved on, but someone took his statements a little more seriously -- Palm. Yes, the company Roger was talking up, the company in which his firm Elevation Partners owns a particularly large stake, submitted a document to the SEC that summarily disputes all of his hyperactive talking points. It's full of facts and figures and is completely dry, but, like an episode of Yes Minister, is also full of comedic brilliance. Here's the company's reaction to our favorite bit, about the death of the iPhone:

The statement in the second paragraph of the article that "not one" person who bought an Apple, Inc. iPhone on the first shipment date "will still be using an iPhone a month" after the two-year anniversary of that day is an exaggerated prediction of consumer behavior pattern and is withdrawn.

It's good to know that, even in these tough times, there's still some comedy left in the corporate world. More boardroom humor after the break.

[Via Palm Infocenter]

Continue reading Roger McNamee's wild predictions shot down -- by Palm itself

SEC charges, settles with RIM executives over backdating issue

by Donald Melanson posted Feb 18th 2009 at 4:23PM

Well, it looks like RIM's top executives weren't about to get off the hook after just paying a little fine to the Ontario Securities Commission over that backdated stock options issue, as the US Securities and Exchange Commission is now getting on the act with some charges of its own. In a bit of a twist, however, the SEC has simultaneously announced that it has already reached a settlement with the four top RIM executives in question (co-CEOs Balsillie and Lazaridis, plus Chief Operating Officer Dennis Kavelman and former vice president of finance Angelo Loberto), who have agreed to pay $1.4 million in fines and give back the more than $800,000 they made in profits. No more shakeups on the board, it seems, although there's only so many times you can step down from your position before you start to look silly.

Microsoft reports $100M decline in Zune revenue

by Ross Miller posted Jan 23rd 2009 at 11:54AM

Microsoft's newly-announced layoffs and declining profits aren't the only bad news in Redmond -- according to the company's quarterly statements, Zune platform revenue decreased $100 million, or 54 percent compared to the same quarter last year, due to falling device sales. Mega-ouch. Not all is doom and gloom for the Entertainment and Devices Division, which continues to be profitable with a $151 million haul: Xbox 360 and PC platform revenue increased six percent ($135 million) to $2.2 billion. Meanwhile, Apple saw a three percent increase in iPod sales over the same period, so we're anxious to see what Microsoft has planned for reviving the social.

[Thanks, Jason Wong]

Broadcom cofounder Henry Samueli reaches plea agreement, admits he lied to SEC

by Nilay Patel posted Jun 23rd 2008 at 7:56PM

Broadcom's former management team is still in a heap of trouble over falsified financial statements, but it looks like co-founder Henry Samueli has managed to reach a plea deal with the Feds that'll keep him out of jail -- he's admitted that he misstated Broadcom's finances and knowingly backdated stock options issued to executives, and he'll be fined some $12M plus an additional $250K, as well as serve five years' probation. The court hasn't yet approved the deal, but compared to the "warehouse of meth" antics of Henry T. Nicholas III, Broadcom's other co-founder, a little accounting chicanery seems positively straightlaced, you know?

Another Apple shareholder files backdating lawsuit

by Nilay Patel posted Apr 24th 2008 at 12:26PM

After the SEC more or less cleared Apple of those pesky backdating charges and a California court dismissed a shareholder class-action lawsuit accusing the company of improper accounting procedures, it looked like the good times were over, but fear not: another institutional investor has filed suit against Apple alleging the company cooked the books. The Boston Retirement Board filed suit in the Santa Clara County Superior Court, saying that it has investigated the matter and turned up even more evidence, which it can't reveal until the court decides how to handle confidential information. All it will say is that it has proof that "all of Apple's directors were aware of and participated in the backdating scheme," which isn't really new news -- and we're wondering what new information could have turned up that the SEC didn't find in its lengthy, much-watched investigation. Still, it looks like this is the story that won't go away -- anyone ready for some more hot accounting nights?

Steve Jobs subpoenaed over stock option backdating

by Joshua Topolsky posted Sep 20th 2007 at 10:35AM

It's not easy being Steve Jobs. When you're not jet-setting around the world, introducing your disappointing EDGE-only iPhone to the European market, you're getting subpoenaed by US securities regulators over a lawsuit concerning stock option backdating. According to reports, El-Jobso has been called in for the US Securities and Exchange's case against former Apple general counsel Nancy Heinen over backdating option grants to Jobs and other executives. Apparently, Heinen is looking for 45 depositions for the case, though the SEC is hoping to limit that to 12 (per party). SEC lawyers are claiming that Heinen and former Apple Chief Financial Officer Fred Anderson (of Elevation Partners fame) backdated more than $20 million in stock options in 2001 for Jobsy, themselves, and other executives. Anderson -- who's already paid $3.5 million in fines -- claims he was given permission by Jobs himself to backdate the options. An internal Apple review claims it found two questionable stock options awarded to Jobs, but found no wrongdoing on his part. For Jobs' sake, let's hope he stays out of the slammer -- a pretty face like that won't last long on the inside.

[Thanks, Randall]

Dell admits to 4 years of financial malfeasance -- up to $150 million to be scrubbed

by Thomas Ricker posted Aug 17th 2007 at 3:43AM

It's already been a rough year for Dell's dwindling market share much to the delight of HP and Apple. Now, as followup to the evidence of accounting errors and misconduct announced back in March, Dell has admitted that their senior / executive management regularly falsified quarterly financial returns from 2003 to 2006. In a filing with the SEC, Dell admits that "account balances were reviewed, sometimes at the request of senior executives, with the goal of seeking adjustments so that quarterly objectives could be met." In only one case did Dell actually invent sales numbers, usually, the shifty accounting involved the recognition of revenue earlier than appropriate. Dell must now reduce its reported net income for the period by as much as $150 million with the biggest downward restatements hitting Q1 2003 and Q2 2004 by 10 to 13 percent -- other quarters are expected to be 5 percent or less. It's unclear whether any of the management responsible for, or engaged in this malfeasance are still employed by Dell. Dell's CFO only said that "disciplinary action had been taken" and that current management and the board are "comfortable we have taken steps necessary to make sure this never happens at Dell again." Dell's stock is actually up a few points in pre-market trading which could be a sign that investors aren't too concerned by the piddley restatement (Dell posted $12 billion in net income during the period in question) and are stoked to see Dell finally move forward, undistracted. That is, if the SEC agrees. We'll see how the stock does once investors wake to the latest fetor to seep outta Austin this side of SXSW.

Xbox 360 exec Robbie Bach's personal red ring of death: insider sales?

by Thomas Ricker posted Jul 12th 2007 at 8:26AM

Robbie Bach, Microsoft's executive in charge of the Xbox game console, raised a few eyebrows recently when he sold millions in Microsoft stock just prior to going public with Xbox 360 woes. In a review of SEC filings, Robbie sold some $6.2 million worth of company stock between May 2 and Microsoft's July 5th announcement of charges exceeding $1 billion for Xbox 360 repairs. It is of course perfectly normal for high-ranking corporate execs to turn over company stock. However, this is typically done according to a schedule in order to deflect concerns over insider trading -- Bach's trades followed 8 months of zero sales. Microsoft's stock did not make a significant move after the announcement which, in legal hindsight, has led some insider watchdogs to give Robbie the benefit of the doubt. We'll see if the SEC is so forgiving.

SEC to fine Nortel up to $100 million for shady accounting

by Nilay Patel posted Jun 8th 2007 at 8:53PM

Looks like a heartfelt apology just wasn't enough for the SEC -- the agency is expected to fine formerly high-flying communications company Nortel up to $100 million this week for inflating revenue on quarterly reports by an estimated $3.4 billion. The SEC is also suing a handful of former Nortel executives who approved the bogus numbers, allegedly to trigger bonuses for themselves. Nortel just settled several outstanding class-action lawsuits from shareholders for slightly more than $2 billion, so another $100 mil probably seems like a drop in the bucket at this point, but here's hoping this whole sad chapter is over -- we still want to see that MIMO WiMAX rig start shipping.

NVIDIA faces barrage of civil lawsuits

by Darren Murph posted May 31st 2007 at 6:24AM

Those price fixing allegations that AMD and NVIDIA were facing late last year may have vanished from the forefront of your memory, but you can rest assured that the legal teams connected to the two are still workin' overtime to clean things up. Apparently, NVIDIA has been slapped with as many as 51 civil complaints over "price fixing and anti-competitive agreements, among other things," and on its March 16th filing with the SEC, the firm states that "42 civil complaints as of March 14 were filed against it on the same allegations." Notably, the outfit did state that the "lawsuits are putative class-actions," and unsurprisingly felt that they were all lacking merit and would be fought vigorously. Tsk, Tsk.

[Via Gearlog]