Novell, Dell Face Delisting From NASDAQ

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.

Delisting is a long, slow process...

that can get mired down any number [nasdaq.com] of ways.

Non-story anyway.

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).

Stock Option Backdating

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

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:Stock Option Backdating

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.

Stock option accounting? Amateurs...

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.

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.

in 2001, Delisting was begining

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 :)

Is This The END OF DELL AND NOVELL?

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 of time so both companies get to stay on the exchange!

The -only- people that get the book thrown at them are egregious and stupid violators that don't knuckle under or don't pay to play. Martha Stewart is an excellent example. Complicated schemes like back-dating options will catch 1 maybe two of at least dozens of companies that did it. The proverbial "mission accomplished."

Apple not under investigation

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]

More common that you think

This is like the Pinkslip you get from the power company when you dont get the bill paid on time.

Dodgy Dell

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!

You're getting a shareholder lawsuit! [smartmoney.com]

Tabloid headline

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?!?

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...

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.

Re:Novell?

You'd be surprised. I work for a software company that currently supports software that's been in the field for 20 over years (between acquisitions and people refusing to upgrade). I would say easily, more than 30% of the clients I work with still deal in a Novell Environment. This is analagous to those clients that are still in Windows 95 (and quite often are one and the same). If it ain't broke, why fix it?

Re:Novell?

they bought SuSE

Re:Novell?

Netware is dead but OpenSuSE [opensuse.com] is still kicking. Although I'm thinking about switch to Ubuntu [ubuntu.com].

Re:Greaatt...just what i needed to hear

I'm sure my network instructor doesn't think the Novell and Apple merger will now happen as he speculated a few years ago. I suspect he was pimping the stocks since he had shares of both in his retirement account.

Novell is still around

They are still around. We use them here at the New Mexico Child, Youth and Family Development Department. It's actually one of the main reasons we managed to convince our management to go open source. Novell bought SuSE Linux, and we got 50 free SuSE Linux Enterprise Server licenses with full support. Now most of our back end stuff runs on SuSE. We still use Novell file and print servers, though.

Thank God

If Dell didn't have a monopoly, we'd have to choose from among IBM Thinkpads, iBooks, HP Pavillions, and who-knows-what else.

Re:Novell?

Novell still has a lot of great software. I think they have the best webmail interface, although it's free Hula [hula-project.org] is a free version of Novell's NetMail. If I was implementing a webmail solution right now I would definately lean towards Novell's NetMail w/ eDirectory.

Re:Novell?

here are the university of manchester they are still using them for thier main login system and many shared file areas (homedirs have been moved to a new san which i belive is samba based but moving shared file areas has been abandoned at least in our department due to very different permissions handling).

they is also zenworks application deployment which is very very usefull if you have lots of users using lots of different software and moving arround a lot (read: students)

afaict netware makes thier money through selling more licenses (client and server) to existing customers and pressuring customers into upgrades by refusing to sell more cals for older versions, at least thats the impression i get from some people i've spoken too.

Re:Now is the time for the workers to rise up

We have nothing to lose but our chains!

....and our stock options.

Uh, you might wanna rethink hugging that...

If the battery goes off...

Re:Greaatt...just what i needed to hear

I'm currently rethinking that resume and interview with Novell now...

It could be a good thing: This will probably drive their stock price down quite a bit. If they hire you, any options you get will be set that much lower. After this all blows over, the price will recover and you collect the difference.

The actual thing that should make you rethink your interview is their almost uninterrupted history of marketing blunders over the past 15 years.

Re:Now is the time for the workers to rise up

Come, comrade; let us toast mother Russia and sing songs of the glory days! [/thick_russian_accent]
In Soviet Russia, NASDAQ lists you. Oh, wait...