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SEC probes Apple over CEO's health reports

Posted: 23 Jan 2009     Print Version  Bookmark and Share

Keywords:investigation  management guidance  Macintosh  weakening economy 

A possible lack of candor from Apple Inc. about the health of its chief executive Steve Jobs has triggered an investigation by the Securities and Exchange Commission, according to a report by Bloomberg. The SEC wants to make sure Apple did not mislead investors about Jobs' condition.

Apple's shares rose 4.2 per cent on Jan. 5 after Jobs released a letter indicating he had a fairly minor "hormone imbalance" that would not impact his duties. On Jan. 14, Jobs released another statement saying he was taking a leave of absence until June due to distractions around his health as well as the fact his condition was more complex than he previously thought. Apple's stock dropped as much as 8.4 per cent since that time.

Bloomberg reported earlier that Jobs may be considering a liver transplant as a result of complications after treatment for pancreatic cancer in 2004.

The news comes as Apple is about to release its latest quarterly results. The results are not expected to include any surprises, according to Brian Marshall, a financial analyst with Broadpoint.AmTech. Apple is expected to report quarterly revenues of about Rs.49,320 crore ($9.856 billion) and provide guidance for its March quarter of revenues dropping as low as Rs.35,025.47 crore ($7 billion), due in part to the economic recession.

"We expect to see a roughly in-line December '08 quarter and believe management guidance regarding the March '09 outlook will be conservative, as typical," said Marshall in a report.

"Despite the negative news regarding Steve Jobs' health outlook and the weakening economy, Apple is down only four per cent vs. the Standard & Poor's 500 down six per cent year-to-date, so we believe a tremendous amount of negativity is factored into the stock at current levels," he added.

Specifically, the analyst said he expects to see quarterly shipments of Apple iPhones of about 45 lakh units for the December quarter dropping to about 35 lakh for the March quarter. He pegged sales of Macintosh computers at 24 lakh and iPods at 2 crore in the December quarter dropping to 21 lakh and 1 crore respectively in March.

-Rick Merritt
EE Times

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