Nvidia gets delisting warning from Nasdaq

S

satein

Regular
Yes, I first read it on theINQ here...
http://www.theinquirer.net/default.aspx?article=34366
Which is quoted from BusinessJournal here...
Nvidia gets delisting warning from Nasdaq
BusinessJournal said:
Nvidia Corp. received an expected notice of noncompliance from Nasdaq because of late filing, the company said Tuesday, and will request a hearing before the listing qualifications panel.

Santa Clara-based Nvidia (NASDAQ:NVDA) said Monday it missed the deadline to file second quarter financials with the Securities and Exchange Commission after a probe into its stock option practices turned up some discrepancies. Nvidia said an internal review into grants dating back to the company's IPO in 1999 showed additional costs related to past grants.

The SEC has asked for information regarding the company's stock options, and Nvidia said it doesn't yet have an estimate for the amount of additional expenses, tax effect, or what periods may need to be restated.
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There is no comment on the INQ wristle but after reading it, it sounds not very serious to the NVidia (or not).
 
Even if they are found "guilty" and have to restate their earnings all the way back to 1999, what does that mean? What could it potentially cost them?
 
Ratchet said:
Even if they are found "guilty" and have to restate their earnings all the way back to 1999, what does that mean? What could it potentially cost them?
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Fines, goodwill, lawsuits from former shareholders, and charges against individual officers of the company are all possibilities. None of which are good news for their stock price. Such things often hurt the bottom line more indirectly through a (temporarily) lessened perception of the company in the market than it does directly in actual penalties.
 
Uttar is on vacation..he does not know yet but I bet he can sense it in the air ;)
 
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I doubt it will be a big deal. There is a never ending flood of companies now that have to deal with such stock option probes. I expect Apple to sail through as well.
 
This delisting warning is not something shareholders even want to hear. If NVDA tanks today , which I'm watching, those rumors of INTC buying dont seem as far fetched...

And no, I have not done my due diligence yet.

Possibly good potential money making time...
 
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Hmm, there stock doesn't seem to be much affected by it right now, in fact, trading better at week's end at 29.56. In fact, that looks relatively higher than what it was before the news broke about the stock options and backdating via their quarterly cc last month.

Is it possible this has only helped them? (just kidding :LOL: )
 
It's no surprise because it's nothing sensational (yet). Restating earnings does not imply that things are going to change substantially once the process is complete. It's also not inherently illegal - restatement of earnings is a common accounting practice. Nvidia has also never issued a dividend so this further reduces the material impact to shareholders.
 
Nelsieus said:
Hmm, there stock doesn't seem to be much affected by it right now, in fact, trading better at week's end at 29.56. In fact, that looks relatively higher than what it was before the news broke about the stock options and backdating via their quarterly cc last month.

Is it possible this has only helped them? (just kidding :LOL: )
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To be fair, as noted there's over 100 companies being investigated by the SEC Including Apple for just this problem. I'm sure some ppl would love for this to be a big problem. But in the grand scheme of things I think it won't be as it won't affect their cash or prior quarterly earnings. From their press release:

Although the review is ongoing, the Audit Committee has reached a preliminary conclusion that incorrect measurement dates were used for financial accounting purposes for stock option grants in certain prior periods. As a result, NVIDIA may record additional non-cash stock-based compensation expense related to stock option grants. Any additional non-cash stock-based compensation expense recorded will not affect the Company's cash position or reported revenue for the recently completed quarter or any previous periods.
 
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nAo said:
Uttar is on vacation..he does not know yet but I bet he can sense it in the air ;)
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It was publicly known that they weren't even thinking there was a chance in a billion to report the thing in time, and "the 10th of September" was the deadline, iirc - so why would I even havd had to sense it? :p

I'm surprised that the NASDAQ actually bothered to even send a delisting warning letter, but I guess they're not the only one getting those warnings right now and the NASDAQ just wants to get investors to think they're [a lot more] serious [than they really are] on the options backdating fiasco. The real surprised would be if, say, a second warning came. Then things would risk tanking stupidly, and even more so if it was an event isolated to NVIDIA this time around (which I'd doubt).

I think it's relatively clear to me that all major shareholders and institutions are expecting the impact of the improper accounting of these operations to have an absolutely negligible impact on the restated results. I'd tend to believe the same, but we'll have to see just how negligible that really is...


Uttar
 
Uttar said:
I'm surprised that the NASDAQ actually bothered to even send a delisting warning letter, but I guess they're not the only one getting those warnings right now and the NASDAQ just wants to get investors to think they're [a lot more] serious [than they really are] on the options backdating fiasco.
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Not at all.

1). That's what you have permenent paid staff for. They do their jobs.
2). If you start not following your own rules, even when you're 99.94% sure you're just shuffling paper to no long term end, you buy yourself all kinds of trouble down the road when a "real" case shows up and the company involved (and their lawyers) start bleating about bias and favoritism in the administration of the rules. . .
 
by way of comparison, Dell's problems look far worse. Compare the wording from Dell to NVIDIA From their press releases:



Although the review is ongoing, the Audit Committee has reached a preliminary conclusion that incorrect measurement dates were used for financial accounting purposes for stock option grants in certain prior periods. As a result, NVIDIA may record additional non-cash stock-based compensation expense related to stock option grants. Any additional non-cash stock-based compensation expense recorded will not affect the Company's cash position or reported revenue for the recently completed quarter or any previous periods.

Dells:

The investigations have indicated the possibility of misstatements in prior period financial reports, including issues relating to accruals, reserves and other balance sheet items that may affect the company’s previously reported financial results. The company is working with the Audit Committee and with the company’s independent auditors to determine if any restatements of prior period financial reports will be necessary. “We have not yet reached any conclusion on materiality as to these issues,â€￾ said Don Carty, chairman of the Audit Committee reviewing the matter. “We are continuing to investigate the matter fully,â€￾ Carty added.
 
nelson.gif
 
Par for the course and doesn't seem like anything out of the ordinary.

Rules/laws concerning stock options are inherently fuzzy and simply guidelines, which require a lot of legal wrangling and occasional audits. I'd say 90% of the publicly traded companies out there would have found "discrepencies" concerning stock options if audited as there is no hard-set letter of the law/rules, but so many ways to forecast/value them... all of which are legal, but need a lot of paper work and share fudging to deal with. Either way, as the blurb explains, really doesn't impact a company much in most cases- just some numbers between shares and options change... and some option holders may execute + taxed.
 
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