More of my sites

WinInfo Daily News
SuperSite for Windows
Windows IT Pro Magazine
Connected Home
Thurrott Dot Com
Windows Weekly at TWIT

About this site

For six years, the Internet Nexus served as my technology blog, but I've since started blogging at the SuperSite Blog instead. If you're looking for the blog, please head there. --Paul

Friday, March 19, 2004

Lawsuit alleges Apple retail impropriety; product invoices raise accounting questions

Apple's bogus financials continue unraveling.

Now, Think Secret reports that they've seen documentation proving that Apple is undercharing its stores and therefore illegally understating its losses. Interesting reading.

"Dealers behind the lawsuit believe they have the answer: that Apple is defrauding shareholders and misleading the public by misrepresenting the profitability of its stores. Substantiating their claim are thousands of product invoices -- documents that were examined first-hand by Think Secret and raise questions about Apple's accounting practices.

Apple publicly says that its retail stores pay the same dollar amount for its products as independent resellers do, through an accounting method that's intended to show the true financial status of the stores. The invoices, however, show the stores paying significantly lower prices for the same Apple products. If the charge is true, the dealers say, then Apple is providing the appearance that its retail stores are performing better than they actually are."

Furthermore, Apple even tried to cover up its accounting practices. In its May 2003 SEC filing, the company noted that its Apple Stores pay the same price for products as resellers. However, its most recent SEC filing, from February 2004, "contains slightly different language; instead of saying that the stores pay the same prices as 'the Company's resellers' for products and AppleCare contracts, the filing refers to 'major channel partners.'"

"I think the invoices say it all," Santos said. "Since 2001, Apple's retail management has been telling all the dealers that there is a 'level playing field.' They have also said that they pay exactly the same prices for products as the dealers do, but this is clearly not the case either." Santos said he believes that either Apple does not know how much the stores pay for products or "they know exactly what they're doing and it is the only way they can make it look as if the Apple retail initiative is profitable."

"I do not believe that Apple's retail stores have been any way near as profitable as Apple states and, in reality, are probably losing money," Armes said. "I have reviewed the Apple invoices along with Apple's statements about their retail stores and am convinced Apple is fraudulently misleading shareholders along with everyone on Wall Street."

[ Posted at 10:56 AM | Permalink ]