Feeds

SEC prods IBM with informal probe

Option expensing under scrutiny

  • alert
  • submit to reddit

Combat fraud and increase customer satisfaction

The US SEC (Securities and Exchange Commission) has delivered a note to IBM, letting the company known it's under investigation.

The Commission has started a preliminary look into how IBM handled disclosures relating to its first quarter earnings report and expensing of equity compensation. IBM's first quarter results came in well below expectations, surprising many analysts. A number of pundits complained at the time that IBM's guidance around how it was to handle the expensing of options seemed confusing and to affect their Q1 estimates.

"EPS including options expense was $0.85; ex-options, EPS was $0.95, a nine cent miss vs. consensus estimates ($1.04) prior to last week, when IBM told analysts to lower estimates $0.14 due to options expense," wrote Sanford Bernstein's analyst Toni Sacconaghi after IBM reported its first quarter results. "We note that IBM’s guide-down of earnings by $0.14 last week did not reflect the true expected cost of options in the quarter of $0.10."

In a press release, IBM said it would comply with the SEC's investigation and reminded everyone that such an investigation does not indicate any wrongdoing. The SEC quite often looks into complaints without taking formal action.

It's unusual for bellwether such as IBM to miss analyst expectations by as much as it did in the first quarter. IBM said a number of deals just didn't close at the pace it forecast and that there was quite a sudden drop in sales. IBM has since moved to fire up to 13,000 workers in Europe and the US. ®

Related stories

Shareholders approve Symantec and Veritas marriage
Analysts circle HP with CEO's hammer expected to come down
Shred It!
BMC asks for more time to get books SOX-ready
US SEC curious about HP CEO's stock sales - report
US SEC shows Brocade its formal probe

3 Big data security analytics techniques

More from The Register

next story
Dropbox defends fantastically badly timed Condoleezza Rice appointment
'Nothing is going to change with Dr. Rice's appointment,' file sharer promises
Audio fans, prepare yourself for the Second Coming ... of Blu-ray
High Fidelity Pure Audio – is this what your ears have been waiting for?
Did a date calculation bug just cost hard-up Co-op Bank £110m?
And just when Brit banking org needs £400m to stay afloat
MtGox chief Karpelès refuses to come to US for g-men's grilling
Bitcoin baron says he needs another lawyer for FinCEN chat
Zucker punched: Google gobbles Facebook-wooed Titan Aerospace
Up, up and away in my beautiful balloon flying broadband-bot
Apple DOMINATES the Valley, rakes in more profit than Google, HP, Intel, Cisco COMBINED
Cook & Co. also pay more taxes than those four worthies PLUS eBay and Oracle
It may be ILLEGAL to run Heartbleed health checks – IT lawyer
Do the right thing, earn up to 10 years in clink
prev story

Whitepapers

Top three mobile application threats
Learn about three of the top mobile application security threats facing businesses today and recommendations on how to mitigate the risk.
Combat fraud and increase customer satisfaction
Based on their experience using HP ArcSight Enterprise Security Manager for IT security operations, Finansbank moved to HP ArcSight ESM for fraud management.
The benefits of software based PBX
Why you should break free from your proprietary PBX and how to leverage your existing server hardware.
Five 3D headsets to be won!
We were so impressed by the Durovis Dive headset we’ve asked the company to give some away to Reg readers.
SANS - Survey on application security programs
In this whitepaper learn about the state of application security programs and practices of 488 surveyed respondents, and discover how mature and effective these programs are.