IBM uses phony chart, makes up earning's guidance, is slapped on wrist

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IBM settled with the SEC, without admitting any wrongdoing, over charges that it deliberately used a misleading chart (pictured) in a 2005 earnings call. The IBM chart in question portrayed the impact of expensing employee stock options on EPS in 2005. IBM said in the chart that the negative impact of expensing employee stock options would be 14 cents a share in Q1 and 55 cents in 2005, despite internal estimates that EPS would dip by only 10 cents a share in Q1 and 39 cents a share in 2005.
IBM produced the bogus numbers because it didn’t want analysts to increase the company's expected growth rate, in a partial attempt to offset an increased pension cost. No IBM executives were named in the complaint and the company was not fined. IBM did agree to not do anything wrong in the future. Let that be a warning to companies that want to make up numbers. The SEC’s teeth are awfully sharp.
Did IBM Show Analysts a Phony Chart? [CFO.com]

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