Post a CommentBroadcom's Stock Woes Double
By Colleen Taylor -- Electronic News, 9/8/2006
Broadcom Corp.'s stock options trouble has just doubled.
The company today announced it has supplemented its preliminary report regarding its internal equity award review, and said it will have double the additional non-cash stock-based compensation expense than it had previously forecast—putting the expected expense at at least $1.5 billion. Specifically, the company said the extra expense will be "at least twice the amount previously estimated, and could be substantially more."
Click here for more news on the unfolding stock option investigation.
The review, which is being directed by the audit committee of the company's board of directors with the assistance of outside counsel, has not yet been completed and no final conclusions have been made.
In July, Broadcom announced that its audit committee had determined that the company's financial statements for the years 2000 through 2005 and for Q1 2006 would need to be restated and should not be relied upon pending completion of the restatements. At that time, the company stated that it expected to record additional non-cash stock-based compensation expense then estimated to be in excess of $750 million, substantially all of which would be recorded in the years 2000 through 2003.
While the equity award review is still ongoing, Broadcom has identified more stock option grants for which the measurement dates differ from those originally used to record such awards.
Approximately 95 percent of those options awarded between 1998 and 2003 were awarded to employees other than executive officers, according to the company.
The additional non-cash stock-based compensation expense will be recorded in the company's filings for Q1.
Broadcom has been mired in the industry-wide stock options controversy for months. Most recently, the company has faced a delisting threat from the Nasdaq market due to Broadcom's failure to file regulatory Q2 forms on time to the Securities and Exchange Commission (SEC) as a result of the stock options probe. The company came under investigation by the SEC in June after Merrill Lynch identified Broadcom as one of six companies that it noticed had displayed suspicious stock options grants and pricing.
Further, the company also disclosed today that it has been contacted by the U.S. Attorney's Office for the Central District of California and asked to produce a subset of the documents requested by the SEC.
Broadcom stated that it continues to cooperate with the informal inquiry it received from the U.S. Securities and Exchange Commission, and is working with government counsel to define the scope of its request and intends to cooperate.
