Options Take Bigger Bite Out of Apple

Updated from 8:38 a.m. EDT

Options backdating at Apple Computer (AAPL) was apparently much more prevalent than the company had led investors to believe.

And that's not good news for investors. Not only does it mean that investors will likely have to throw out Apple's past earnings reports, but also, it likely increases the possibility that Apple will draw the attention of federal regulators.

Even worse, the news also increases the odds -- however remote they still may be -- that CEO Steve Jobs may be forced to leave the company as a result.

In early Friday trading, amid a broad market surge, Apple's shares were off $1.48, or 2.1%, to $68.11.

The iPod maker warned investors late Thursday that its internal probe into its past options grants had uncovered evidence of additional instances of "irregularities."

As a result, the company plans to delay filing with the Securities and Exchange Commission its report for its just-completed quarter and said that it will likely have to restate some of its past financial reports.

The restated earnings would include options charges that the company hadn't previously accounted for, Apple said in a statement.

"The company has not determined the amount of such charges, the resulting tax and accounting impact, or which periods may require restatement," Apple said. "Accordingly ... the financial statements and all earnings and press releases and similar communications issued by the company relating to periods commencing on September 29, 2002 should therefore not be relied upon."

Company spokesman Steve Dowling declined to say when the company expects to wrap up its investigation or what it had uncovered thus far.

"We're focused on resolving the matter as quickly as possible," he said.

Apple said late last month that it had found problems with options grants made between 1997 and 2001, including a one made to CEO Steve Jobs. The company said it had hired an outside counsel to investigate.