Autodesk reported another quarter of record revenue ($450 million in Q2, see press release) but chose not to reveal profit until it concluded an internal investigation of stock options. News of this investigation touched off a whirlwind of headlines drawing attention away from an otherwise stellar quarter and has even negatively impacted Autodesk stock prices (down 5% at last check).
This is not the first time Autodesk has been bothered by stock options. You may recall that back in May when Autodesk reported Q1 earnings, net profit fell 36% due to stock option expenses, offsetting a 23% gain in revenue (see MarketWatch story).
The San Francisco Chronicle reports more than 80 companies are doing internal investigations or are being investigated by the Securities and Exchange Commission for activities relating to stock option grants. (see Options Probe Extends to 2 More Tech Stalwarts...). Autodesk is the first CAD company that has launched an investigation, as far as I know. Carl Bass, CEO of Autodesk, was quoted by Reuters news service as saying he has no reason to expect the SEC will probe Autodesk.
Handling this crisis is the first real test for Bass, known more as a technologist than a firefighter. Bass took over the reins to Autodesk from Carol Bartz earlier this year. Bass was previously Autodesk's chief technology officer and is respected among Autodesk programmers as being one of them, some one who has actually written code. By comparison, Bartz' survival skills are legendary. Not only did Bartz guide the company through its lowest point (the infamous AutoCAD R13), she made Autodesk into a billion dollar company.
While no improprieties have yet come to light, the internal investigation may well center on the extremely lucrative insider trading that has been going on at Autodesk for years. Chief among the beneficiaries has been Carol Bartz herself. In one 12 month period, Bartz netted $230 million in stock options. Though no longer in Autodesk's day to day service, Bartz is still in still busy with stock transactions and cashes in stock options every few days to the tune of hundreds of thousands of dollars each time, if not millions (see Yahoo! Finance).
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