An audience of two

Tuesday October 17, 2006

Business Week article on Analog Devices Inc.

Business Week has published an article on dodgy accounting practices by Analog Devices Inc. The first practice highlighted was accelerated vesting.

Last October, Analog speed-vested options valued at $188 million, which pumped up its 2005 aftertax income by $134 million. Only Viacom Inc. and Sun Microsystems Inc. boosted earnings more from accelerated vesting, according to Jack T. Ciesielski, publisher of The Analyst's Accounting Observer.

Sounds like Sun's been doing something iffy too, right? What they actually did was to vest only the outstanding stock options that were so far underwater they would expire before they were ever worth anything again. I think the cut-off point was above $10. Personally I've got some options price at $56 and even though I'm confident that Sun is heading in the right direction I'm not dumb enough to think that they'll ever make me anything other than bitter.

So yeah, Sun avoided taking an artificial accounting hit for something that was totally worthless. Bite us.