Novell initiates stock option investigation
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(InfoWorld) - Novell has begun an internal review to investigate how the company granted stock options to employees in recent years and to assess whether, in the light of the findings, Novell will need to restate any earnings. The software vendor made the announcement Tuesday afternoon as it released third-quarter results for fiscal 2006. Novell cautioned that the results should be considered preliminary financials until it has concluded its voluntary stock options review. The company didn't provide a date as to when it expects those investigations to be complete and so it's possible Novell may need to delay the filing of its third-quarter Form 10-Q to the U.S. Securities & Exchange Commission (SEC). On a conference call with analysts, Ronald Hovsepian, president and chief executive officer of Novell, said the review was "in no way a reflection on the quality of our business or the future growth prospects." Novell will report on the progress of the investigation as appropriate. "In the meantime, it's full speed ahead with building our business and executing on our strategy," he added. Novell's move comes as the SEC continues to widen its probe into potentially fraudulent stock options practices occurring now or in the past at U.S. companies and related to the backdating of options. By timing the granting of options to a low point in a company's stock, an options recipient could buy shares cheaply and then resell them for a greater profit once the vendor's share price rose. Already the SEC investigation has touched a number of IT companies including Sycamore NetworksÂ and the SEC has filed securities fraud chargesÂ against the former managementÂ heads ofÂ software vendor Comverse TechnologyÂ and storage networking firm Brocade Communications Systems. Other IT vendors including Apple Computer, CA Inc., McAfee, and RambusÂ have identified irregularities in their options accounting which, in some cases, led to the companies restating financial results dating back several years. Novell's preliminary third-quarter results saw the company reporting net income of $11.6 million on revenue of $241.3 million and earnings per share (EPS) of $0.03. For the fourth financial quarter due to end Oct. 31, Dana Russell, Novell's interim chief financial officer, estimated the company's revenue will be between $246 million and $256 million with an EPS of $0.04. Those predictions don't take account of the findings of the stock options review, he noted, with the likely impact of that investigation knocking EPS down to $0.01. Russell said Novell's leadership isn't happy with the company's current overall level of profitability, but believes it's on "the right track for the health of the business," expecting long-term profitability to improve.
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US antitrust regulators are investigating possible anti-competitive practices at the American Stock Exchange and Chicago Board Options Exchange, according to the annual report of the National Association of Securities Dealers.
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The Motley Fool - On Tuesday, Aug. 29, networking software company Novell (Nasdaq: NOVL - News) released preliminary Q3 2006 earnings for the period ended July 31.
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Apple Computer finds problems in the way stock options were granted, an internal investigation shows.
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U.S. antitrust regulators are  investigating possible anti-competitive practices at the  American Stock Exchange and Chicago Board Options Exchange,  according to the annual report of the National Association of  Securities Dealers.
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