Tricks of the trade…

February 11, 2004

It’s pretty ironic how companies that tend to rely heavily on stock options are the ones complaining the loudest about the new rules that require them to disclose their stock option expenses much more prominently than before. It’s so unfair, they say! Take Apple Computer (AAPL) , which disclosed in its 10-Q yesterday that its earnings would have been 9 cents a share for the quarter, nearly 50 percent lower than the 17 cents that was widely reported. That disclosure is at the beginning of the footnotes, as required. But investors have to dig deeper to look at the expected rate of volatility, a number that a lot of companies have been playing with lately to make their stock option expenses look smaller, now that they’re required to provide more prominent disclosure. Apple lowered its volatility rate from 63% by about a third to 40% for the most recent quarter.

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