[zachs]

From ThinkSecret:

March 19, 2004 - Special Report Deep inside a dealer lawsuit against Apple is a burning question: how do Apple's retail stores account for what they pay for the Apple products they sell?

The 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.

That'd really suck if it's true...

[The Godfather]

Apple is subsidizing the Apple Stores. This is not a big deal.

[disectamac]

It is a big deal even if it only skews public perception, or I should say shareholder perception. tyco, enron, waste management, worldcom, sunbeam, anderson, martha stewart. It would really suck to see apple on that black list. In that bad spot light, it's disasterous.

The theme recently has been that Apple has been the target of one to many lawsuits by competition who are upset with Apple's style of business. Their tight controls, vertically integration, think different business practices have pissed the entire business community off. Lets hope they get passed this. Apple PR and Apple legal are up to bat.

[dampeoples]

If this is true, they'll hang Apple, while Microsoft gets by with anything

Somethin' looks fishy. If Apple were really subsidizing the Apple Stores, they wouldn't be so blatant about it.

Have a look at those invoices. Look at the quantities - most of them are very small. I would think if those were customer stock, the quantities would be much higher. I wonder if the Apple Stores were used as a depot for employee purchases, or in the case of that big powerbook order, corporate purchases.

Also, how did the dealer get those invoices legally?

[amsalpemkcus]

better price due to better inventory management? there has to be something missing there..too obvious a problem

[Powaqqatsi]

Call me stupid but is there anything illegal about that ??

[disectamac]

Originally posted by Powaqqatsi:
Call me stupid but is there anything illegal about that ??

The line between legal and illegal become blurry when it comes to corporate governance. While the SEC sets standards, rules that corporations should adhere to, the enforcement of such rules and the applicability to individual cases are similar to the enforcement the FCC is currently demonstrating. Sometimes four letter words fly on the radio and tv and sometimes they don't; these are very confusing times.

Many corporations take advantage of these circumstances and may do things that may otherwise be seen as unethical business practice, and in many cases with the help of political influence. Cash is King . The issue, in my view, here seems to be that apple retailers that are non Apple Stores feel that Apple Stores have an unfair advantage. There is nothing illegal about this in itself but if a public corporation claims something in good faith then said corporation is expected to adhere to its claims by ethical business standards.

Also, the claims are that the lower selling price to Apple Stores is an unethical internal accounting practice used by Apple to make it seem as if the Apple Stores have a higher profit margins than they actually would have if Apple corp. would have charged the stores at the price Apple claimed it has been charging all retailers equally.

These internal accounting tricks are the types of practices that caused a lot of corporations to collapse in recent history. Just look at Waste Management and how they extended the depreciation rate of it's millions of dumpsters to make it seem as if their operating costs were low which in turn makes it look as if their profits were higher. (only on paper).

In a nutshell, it is in the best interest of a misguided executive types to make each fiscal period look great on paper in order to boost stock prices since many executive types have been given large stock options (steve jobs come to mind anyone?). Many executives are more concernened with stock performance for this reason and not as nearly as concernened with the actual performance of the business. I'm not making accusations, I love apple, but to see this article really struck a nerve as it seems that this is the perception that is starting to form of Apple as a company. Lets keep our fingers crossed.

[mitchell_pgh]

Hmmm, obviously not that big of an issue as it hasn't been picked up by anyone...

[disectamac]

yet

[Zimphire]

No, not a big issue.

Shame on Think Secret for being drama queens.

[disectamac]

I just hope the other drama queens don't follow suit. Look what they are doing to Martha and Wacko Jacko, just because they are different, arguably of the human species but still, It would really suck if this kind of thing happened to Apple

[Person Man]

Originally posted by disectamac:
I just hope the other drama queens don't follow suit.

They might pick it up, but I'd be more worried about Cnet picking it up, than any of the other rumor sites.

That said, it's still too blatant for it to be the whole story.