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Novell, Dell Face Delisting From NASDAQ 77

Posted by kdawson
narramissic writes to tell us that Novell has confirmed receiving a delisting notice from the NASDAQ stock exchange, after the software company delayed filing its most recent quarterly report to the U.S. Securities and Exchange Commission. Dell is in the same position. Both companies, and others including Apple, are grappling with investigations of the way they issued stock options and — in Dell's case — other accounting irregularities. Both companies are appealing the delisting, which means they won't vanish from the stock exchange anytime soon. NASDAQ rules require listed companies to announce the receipt of a delisting notice.
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Novell, Dell Face Delisting From NASDAQ More

Novell, Dell Face Delisting From NASDAQ

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  • Delisting is a long, slow process... (Score:3, Informative)

    by nead ( 258866 ) on Thursday September 21, 2006 @10:47AM (#16154014) Homepage
    that can get mired down any number [nasdaq.com] of ways.
    • and there are quite a few letters they can add after the ticker,
      probably starting with 'E'... DELLE

    • Non-story anyway. (Score:5, Insightful)

      by khasim ( 1285 ) <brandioch.conner@gmail.com> on Thursday September 21, 2006 @10:54AM (#16154078)
      Novell simply did not file some paperwork by the deadline because Novell is still working on stats related to awarding stock options.

      Once they get those stats straight and file the paperwork, they'll be back in compliance and out of delisting danger (from this issue).
      • Yea, the delisting notice was expected after Dell said earlier this month that it was unable to file its Form 10-Q for the quarter ended Aug. 4 due to questions raised in an accounting investigation by the U.S. Securities and Exchange Commission.
        • Yea, the delisting notice was expected after Dell said earlier this month that it was unable to file its Form 10-Q for the quarter ended Aug. 4 due to questions raised in an accounting investigation by the U.S. Securities and Exchange Commission.

          To be fair, the laptop where dell was storing all of the 10-Q data mysteriously exploded.
    • God, I've had stocks that spent over a year on "delisting" notice before... it's completely inconceivable that the NASDAQ would ever allow a big company like DELL off their exchange, though their regulations probably do require them to at least go through the motions.

  • Stock Option Backdating (Score:5, Informative)

    by maynard ( 3337 ) on Thursday September 21, 2006 @10:52AM (#16154061) Journal
    This issue is very serious. The Senate Finance Committee recently held an investigative session on stock option backdating chaired by Chuck Grassley (R-IA). The upshot was -- of course -- to continue investigating the matter further. A video [videoc-spa...6financerm] ( rtsp://video.c-span.org/15days/e090606_finance.rm ) of the investigatory session has been posted by C-SPAN, and is well worth watching for anyone interested in corporate financial shenanigans to illicitly increase executive compensation.

    For those uninitiated with the process, stock option backdating is a form of option fraud whereby options which should be dated at time B (when the executive was hired, for example) but are instead backdated time A (when they are 'in the money') to insure a profit for the executive. It's crass and obviously illegal.

    Watch the video and you'll enjoy seeing our representatives (on both sides of the isle) enjoying a collegial and humorous discussion on the record with those who should have been asked numerous uncomfortable questions about the practice. There are, fortunately, some very pointed questions. But the session often comes off as a giveaway to the witnesses, with senators and witnesses often laughing together at in-jokes.

    If you're bothered by stock market insiders fraudulently diverting profits to their friends instead of keeping the market fair and clean, this committee session will make your blood boil.

    • Re:Stock Option Backdating (Score:4, Informative)

      by Anonymous Coward on Thursday September 21, 2006 @11:07AM (#16154181)
      It is crass, but _not_ obviously illegal. As long as the stockholders are informed then it is perfectly legal.

      What is illegal is informing your stockholders that options will be granted one way and then granting them a different way.

      • Re: (Score:1)

        by maynard ( 3337 )
        It is crass, but _not_ obviously illegal. As long as the stockholders are informed then it is perfectly legal.

        I encourage you to hold that debate with an SEC investigator and criminal prosecutor. If Elliot Spitzer [state.ny.us] is in a good mood, he might even offer you a plea bargain. (yes, I know this is NASDAQ and not NYSE - but the point is still valid)

      • Re: (Score:2, Interesting)

        by dalewj ( 187278 )
        Well its not illegal (and i agree with informaing the stock holders makes it legal) at the moment. Odds are it will be very soon, but saying that, all the companys I follow didn't inform their investors, so they broke the rules. A few smart ones, made a quick change to their output to investors at the beginning of the year to squeeze it in, but again.. I wasnt informed when they actually did it.

        so as a stock holder, Im highly annoyed that i had to buy stck at actual market prices.

    • Re:Stock Option Backdating (Score:4, Insightful)

      by GlL ( 618007 ) <gilNO@SPAMnet-venture.com> on Thursday September 21, 2006 @11:07AM (#16154189)
      I think that blood boiling was a little too mild for my reaction. This kind of white collar crime affects so many more people than one guy robbing a convenience store, but these guys just get slapped on the wrist. I have a much better idea. Lets send these alleged people to places like Riker's Island. http://en.wikipedia.org/wiki/Rikers_Island [wikipedia.org] Put them in GP and let them experience real imprisonment. I guarantee you that there will be a huge downturn in white collar crime after some executive who bilked investors of millions does hard time.
      • Mixing white and blue collar sociopaths is a great way to start an organized crime syndicate.

    • Re: (Score:2)

      by AK Marc ( 707885 )
      For those uninitiated with the process, stock option backdating is a form of option fraud whereby options which should be dated at time B (when the executive was hired, for example) but are instead backdated time A (when they are 'in the money') to insure a profit for the executive. It's crass and obviously illegal.

      My understanding is that backdating is explicitly legal. However, it is frowned upon by shareholders. So, the companies were illegally executing the legal practice so as not to piss off share

      • Re: (Score:1)

        by maynard ( 3337 )
        That video of the Senate Committee hearing is highly informative regarding the legality of this practice. While there are some who are willing to debate its legality (and you will see that among some of the witnesses), it is also clear that the SEC and (at least some) lawmakers expected this practice to be outlawed with the advent of Sarbanes-Oxley [wikipedia.org].

  • Stock option accounting? Amateurs... (Score:5, Insightful)

    by UbuntuDupe ( 970646 ) on Thursday September 21, 2006 @10:59AM (#16154119) Journal
    The issue of how to represent stock options (i.e., the *option* for an employee to buy stock at some pre-determined rate that may be below the market price, and may or may not be redeemed for stock) on a balance sheet is a difficult, and often debated one. Standards about how to represent them on a balance sheet have changed recently, and it's understandable about how there would be errors here. Even Apple screwed up this way (can't find the link, but it was on slashdot a month or so ago).

    Why not focus on the REAL crime in accounting: the handling of pensions and health care obligations? For decades they were allowed to basically say, "hey, when it comes time to pay you, trust us, we'll have new revenues, and we'll pay you out of that". By not putting these obligations on the balance sheet now, millions of workers' pensions are at risk, and the Pension Benefit Guarantee Corporation may go bankrupt as corporations try to shuck defined benefit plans (which are stupid anyway, but I digress). For GM and I'm sure several others, the present value of these obligations would more than cancel out their entire book value, i.e., the nominal value of all assets they hold. Oops!

    And this isn't about some high-paid employees getting a little extra cash. This is about *retirement money*. And they're still allowed to hide the true cost of these things.

    Someone's priorities are out of order...

    • Retirement plans and the government. (Score:5, Insightful)

      by Ungrounded Lightning ( 62228 ) on Thursday September 21, 2006 @11:17AM (#16154261) Journal
      Why not focus on the REAL crime in accounting: the handling of pensions and health care obligations? For decades they were allowed to basically say, "hey, when it comes time to pay you, trust us, we'll have new revenues, and we'll pay you out of that". By not putting these obligations on the balance sheet now, millions of workers' pensions are at risk, and the Pension Benefit Guarantee Corporation may go bankrupt [...]

      Why should the government make the companies do that? They do exactly the same thing with Social Security. Just substitute "Federal Treasury" for "Pension Benefit Guarantee Corporation".

      The fed "borrows" from the Social Security "trust fund", substituting special treasury bonds with ridiculously low interest rates, and these bonds are NOT included in the national debt calculation. Then the fed spends the money - which will eventually have to be made up from other taxes.
      • My sarcasm detector is off today. I'm assuming you're extending my critique to governmental practices through clever use of satire, rather than claiming that the pracitice of unfunded, undebited obligations is acceptable for both government *and* corporations, yes yes?
        • I'm assuming you're extending my critique to governmental practices through clever use of satire, rather than claiming that the pracitice of unfunded, undebited obligations is acceptable for both government *and* corporations, yes yes?

          Yes. You got it in one. B-)

          (Although the straight point remains valid: Legislators are unlikely to impose corrective requirements on corporations, for fear that doing so would lead to broader exposure of their own massive fraud.)

      • Re: (Score:3, Insightful)

        by pete6677 ( 681676 )
        All of this just goes to show what a crock the pension system is. If you don't control your money, don't count on it being there for you at some future date.
        • If you don't control your money, don't count on it being there for you at some future date
          Yeah, it makes you wonder why all these companies bother with pension accounts, actuaries,investment analysts and shit, obviously they just like wasting their money rather than relying on the infallible financial forecasing ability of every cleaner, clerk or waitress that works for them.
          • Actually, there's sort of a paradox or catch-22, or just something amusing going on in this respect. The "cleaners, clerks, and waitresses" generally aren't impressed by defined benefit plans. *As a general rule* those kinds of workers want their compensation NOW. So they really couldn't care less if their employers tanked -- they've received every penny they were promised.

            So, it's a tough question -- is it "stupid" for a worker to "fail to see" the advantage of an employer pension? Even when that pensi
    • Why do companies ever bother with pensions? Or options, bonuses, commissions, etc? The only benefits that should exist beyond salary are insurance and possibly education reimbursement. If we want to motivate an employee, then we can give him a raise when he does well. If he does poorly, then we can fire him. It's pretty simple, really.
      • Damn straight. I think pensions are offered to satisfy people with the whole "dependence mentality". "Oh, I'm incapable of saving my own money so I want my employer to provide all that." No, if you're contributing to a pension fund, give ME the money to invest instead. If the pension has a tax advantage, give MY savings the same tax advantage. It's ridiculous.

        That said, they should still be held to honor every promise. If it breaks them -- good. Then maybe people will start learning how stupid these

  • in 2001, Delisting was begining (Score:5, Informative)

    by larry bagina ( 561269 ) on Thursday September 21, 2006 @11:09AM (#16154199) Journal

    VA Linux faced a NASDAQ delisting in 2001, due to their penny-stock status (3 months of a closing price under $1.00 leads to delisting). NASDAQ gave everybody a 3-month repreive following the 9/11 bombings, by which time they managed lay off most of their employees, stop hemoraging cash, and escape delisting.

    Oddly enough, that wasn't "news for nerds" or "stuff that matters" -- it was -1 troll. I wonder if it still is :)

    • Re: (Score:1)

      by grub ( 11606 )
      +5, Informative.
      Thanks!

    • Re: (Score:3, Informative)

      by Jeffrey Baker ( 6191 )
      This is a different kind of delisting. LNUX was going to be delisted because the company was worthless and the NASD felt that the general public should not be endangered by trading such a piece of crap on a major market. NOVL and DELL are going to have their tickers changed temporarily until they finish their audits and file their 10-Q, then they will be listed under their regular ticker again. This happens to plenty of companies quite frequently.
    • Good going, that comment just dropped LNUX from $4.15 to $3.95.

      BTW, 2006 has been good to them (from wikipedia):

      On February 21, 2006, VA Software reported its first ever profitable quarter. Net income for the second quarter stands at $10.5 million, or 17 cents per share, compared to a net loss of $702,000, or a penny a share, in the previous year's second quarter. Excluding one time gains from the sale of Animation Factory, VA's profit that quarter would have been $1.1 million, or 2 cents per share[5]. VA f
  • No. Hardly.

    This is more plausible deniability on NASDAQ's part. It looks like they are playing "Tough Electronic Market Enforcer." Like most policies and procedures:
    1. Some Admin Assistant at each company gets to fill out forms and write letters to the Exchange for someone else to sign.
    2. Forms are sent to NASDAQ for "review" which takes a remarkably long time. So long in fact that Dell gets the SEC matter resolved through political donations to a couple of PAC's and their local reps.
    3. And in the nick

  • Apple not under investigation (Score:3, Informative)

    by jhealy ( 91456 ) on Thursday September 21, 2006 @11:17AM (#16154256)
    To be clear, Apple is conducting their own internal investigation, but is not under investigation by the SEC or any other third party. They have not received any delisting notices.

    Source: http://www.appleinsider.com/article.php?id=2049 [appleinsider.com]

    • Re: (Score:1, Informative)

      by Anonymous Coward
      To be clear, you are a fanboi moron who doesn't check reliable sources:

      "Apple has received such a delisting notice" according to MarketWatch. [marketwatch.com]

  • This is like the Pinkslip you get from the power company when you dont get the bill paid on time.
  • Its hardly surprising that Dell are being investigated for accounting anomolies. Its probably not their fault however. They don't even know the price of their own stock :P

    http://www.theregister.co.uk/2006/08/02/dells_rapp ed_asa/ [theregister.co.uk]

  • Dude! (Score:3, Funny)

    by MsGeek ( 162936 ) on Thursday September 21, 2006 @12:29PM (#16154901) Homepage Journal
    You're getting a shareholder lawsuit! [smartmoney.com]

  • Tabloid headline (Score:1, Redundant)

    by kitzilla ( 266382 )
    I'm glad to see the scab picked off questionable securities practicies (screw you, robber-baron corporate weasels), but this headline is a bit tabloid. These notices are routine and automatic, coming to nothing once the company in question files their tardy report.

  • Not again?!? (Score:1, Flamebait)

    by wardk ( 3037 )
    I already de-listed them from my personal give-a-sh*t list.

    but this sounds even more impactive. ouch!

  • Not as doomsday as the summary suggests... (Score:3, Informative)

    by rfunches ( 800928 ) on Thursday September 21, 2006 @04:58PM (#16157286) Homepage

    A significant number of companies are having to restate past and current earnings (the latter is what is causing the delisting notices to go out, because the 10-Q for the most recent ended quarter has to also be restated) so given the situation, the flurry of delisting notices is not surprising. NASDAQ maintains a daily list of companies not in compliance [nasdaq.com] with continued listing requirements; today's list (9/21) had about 70 or so companies delinquent on their quarterly or annual reports (10-Q and 10-K) to the SEC. Most of the other companies don't meet the minimum $1 bid price (a company's shares trading below $1 for more than thirty days are served a notice of intent to delist, and have 180 days to come back into compliance.

    Other reasons that could result in a delisting letter from NASDAQ include failure to maintain:

    • Minimum market value of publicly-held shares
    • Minimum market value of listed securities
    • Minimum number of market makers
    • Minimum level of stockholders' equity
    • Minimum level of total assets and/or total revenue
    • Minimum net income from continuing operations
    • Minimum number of publicly-held shares
    • Minimum number of round-lot shareholders

    Other notable companies that face delisting include nVidia, Autodesk, BEA Systems, CNET, Verisign, and the Cheesecake Factory. The reason? Delinquent 10-K or 10-Q filings.

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