RealTime IT News

Is the iPhone Glow Gone?

Did Apple CEO Steve Jobs profit from a backdated stock option grant? Federal investigators reportedly want to ask former Apple executives about a 2001 grant that may have been improperly dated.

According to the Wall Street Journal, the investigation centers on a grant for 7.5 million options awarded to Jobs. Apple took a $20 million charge after an internal probe revealed Jobs signed a Securities and Exchange Commission (SEC) disclosure form dated Oct. 19, 2001. When the grant was actually finalized December 2001, the value of Apple's stock was higher, according to the report.

"We have pro-actively provided information to the SEC and the U.S. District Court of Northern California all along," Apple spokesperson Steve Dowling told internetnews.com.

Apple told SEC regulators in December an internal review revealed "incorrect measurement dates" for 6,428 grants. Although Jobs was aware or recommended some the questionable grants, Apple said its CEO "did not receive or financially benefit from these grants."

The Cupertino, California company last month said it had "complete confidence in Steve Jobs and the senior management team."

Jobs apologized in October for problems "which happened on my watch." Jobs called the backdating out of character for Apple and pledged to take steps to make sure it didn't happen again.

Apple took an $84 million charge as a result of its internal accounting review.

Federal investigators also want to speak with former Apple attorney Wendy Howell, whom the company fired last month, according to the Wall Street Journal report. Howell said former Apple general counsel Nancy Heinen told her to falsify documents, a claim Heinen's attorney denies.

Heinen's attorney, Cristina C. Arguedas, said her client's actions were authorized by Apple superiors, the report continued.

SEC investigators reportedly also want to talk to Apple's former chief financial officer, Fred Anderson, Anderson resigned in October as Apple released the findings of its internal investigation into stock option backdating. Earlier, both Anderson and Heinen were named in a lawsuit filed in the U.S. district court of the Northern District of California.

Meanwhile, banter continues between Apple and Cisco over who owns the "iPhone" trademark. Cisco, who's Linksys division markets a VoIP "iPhone" claims Apple is infringing. Cisco said it purchased the trademark in 2000 after buying Infogear.

Apple spokesperson Natlie Kerris said the Cisco suit was "silly" and called the trademark claim "tenuous at best."

Apple's comments are a bit of bravado, said Nate Gerhart, a San Francisco partner with Coblentz Patch Duffy & Bass LLP. "It's saying they aren't afraid."

Cisco's use of the iPhone name was "almost surely" prior to Apple. To win, Apple needs to argue there won't be confusion between Cisco's Internet iPhone and Jobs' cell phone iPhone. The U.S. Patent and Trademark Office views "i" indicating 'Internet,' he noted.

"This appears to be more of a negotiating point than a slam dunk legal defense," said Robert Andris, attorney and partner in the Redwood City, Calif., firm of Ropers Majeski Kohn & Bentley LLP. Will the trademark and stock option questions overshadow the iPhone's introduction? Not likely.

"Bad publicity is often brand awareness," Gartner Research analyst Ken Dulaney said.