DEATH AND TAXES
(Update, Monday 3/27, 7:30pm EST: Both the Wall Street Journal and CBS Marketwatch have stories confirming AppleInsider's account of the tax-driven nature of Steve Jobs' sale, as noted by Zoli Erdos in the comments to his earlier post. No updated story on Apple as yet on The Register's site.)
Before more folks interested in Apple and Apple stock get stressed reading the provocative headline in The Register this morning off memeorandum titled "Jobs Dumps Apple Stock", let me point out the context.
First, the back-story off the Register's inflammatory storyby Andrew Orlowski:
"Apple Computer founder and CEO Steve Jobs sold 45 per cent of his Apple stock this week. Jobs sold 4.57m shares at a price of $64.66, netting him a cool $295m.
Jobs was granted the 10m shares in 2003, but they didn't vest until now.
Jobs retains 120,000 vested stocks that were granted in 1997. Last year, Jobs earned $1 salary from Apple."
The story has some of the facts, but no context and the sub-headine "Vested? Sell!", firmly expressing the editorial viewpoint of the author on this "news".
Now, the context, which ironically is better provided by an internet Apple news site, the AppleInsider:
"He (Jobs) did not sell any of his stake in the company.
In order to meet his tax obligations on the 10M restricted shares, which vested this month, Jobs elected to net-share settle -- essentially allowing Apple to withhold and pay to authorities the portion of the 10M shares that would meet his tax payment requirements.
On March 19 -- the date of the transaction -- this portion amounted to 4,573,553 shares at $64.66 a share, or a whopping $295.7M tax payment. Apple then turned over to Jobs the remaining 5,426,451 shares, which at the close of the market on Friday were worth about $325.4M. The value of the withheld shares ($295.7M) will be turned over to the appropriate tax authorities.
As part of the net-share settlement, Apple will essentially sell, repurchase and then retire the 4,573,553 shares it used to pay Jobs' taxes. These transactions will not represent expenses to the company, but will be accounted for as reductions to cash with corresponding reductions to shareholders' equity.
Therefore, the net-share settlement will have the effect of a share repurchase by the company -- essentially Apple reinvesting in itself, which will reduce the number of outstanding Apple shares on the market."
So, folks, nothing to see here.
Other readers on memeorandum, do not get agitated like our friend Forever Geek here.
This kind of a post by The Register makes me empathize with Scoble's outrage over the reporting from an Australian publication suggesting that 60% of Windows Vista needs to be re-written.
While I continue to be a fan of the Register for tech news, I guess I'll have to read their stuff with a more skeptical eye from now on.
This has been a public service blog post by this author on this beautiful Sunday, wherever you are.