Jan. 12 (Bloomberg) -- The man in jeans and black turtle neck may be indispensable.

Apple Inc. Chief Executive Officer Steve Jobs, 51, co- founded the company in 1976 -- and since his recall from a 12- year exile in 1997, Apple shares have jumped from less than $10 to almost $100.

The stock set a record of $97.80 this week when Jobs introduced the iPhone, a gadget that combines a cell phone with the iPod music and video player. IPods and music sales now account for 50 percent of Apple sales.

The Jobs-Apple mystique is such that AT&T Inc.'s Cingular Wireless unit agreed to distribute the iPhone without even seeing it.

But what if government investigators implicate Jobs in Apple's backdating-of-stock-options scandal?

The Cupertino, California-based company's own investigation, led by Apple director and former U.S. Vice President Al Gore, exonerated the CEO. While Jobs had been aware of and recommended some backdating, the investigation said he hadn't benefited from the grants and didn't ``appreciate'' the accounting implications, which in the end forced Apple to reduce its profit over the past nine fiscal years by $84 million.

Jobs clearly would have benefited from a suspect grant in 2001 if it hadn't been subsequently canceled. The option was recorded as approved at the now-famous board meeting that didn't occur on Oct. 19 of that year. Apple recorded $20 million in stock-based compensation as a result of this grant.

That option and another grant to Jobs were canceled in early 2003, when the CEO was given restricted stock totaling 10 million shares, adjusted for a split.

Worst Case

Federal investigators may not be as kind to Jobs as the Gore committee. In early October, several news organizations, including Bloomberg, reported that U.S. prosecutors in San Francisco were looking into Apple's backdating. Legal experts say they expect that the U.S. Securities and Exchange Commission also is looking into the company's actions.

If the government decides Jobs isn't so innocent, Apple directors will face a dilemma. Do they fire their indispensable man? Other companies caught up in the backdating mess have.

Firing Jobs would undoubtedly send Apple shares plummeting as investors who consider Apple and its CEO as one bail out as quickly as they had jumped aboard.

When the Gore report came out Dec. 29, for instance, relieved investors pushed Apple shares 4.9 percent higher to $84.84. Jobs's latest public appearance flashing the iPhone bumped up the stock from $85.47 on Monday to yesterday's close of $95.80.

Computer Reject

Jobs has changed the image of Apple from a niche manufacturer of personal computers to a company with its ear to the latest in consumer electronics. Jobs played to this idea this week when he changed the name of the company from Apple Computer Inc.

Investors clearly expect the new iPhone to build on the success of the iPod, which accounted for $9.6 billion of Apple's $19.3 billion in sales in the year ended last Sept. 30, including iTunes music sales and iPod services and accessories.

Two versions of the new cell phone with a built-in camera, Web browser and touch-control screen will go on sale in the U.S. market in June for $499 and $599. The more expensive model has twice the capacity of the cheaper one.

Cisco Systems Inc. has sued Apple over the rights to the iPhone name. Still, even with another name, the device would be one produced by Apple and Jobs.

Which brings us back to the problem Apple directors would face if the government implicates Jobs more deeply in the backdating business. Jobs has told the CNBC financial TV channel that he is ``to some extent'' responsible for Apple's backdating.

If the board has to fire Jobs, the perception among investors might be that Apple will never be the same. Start placing your bets.

(David Pauly is a columnist for Bloomberg News. Opinions expressed are his.)

To contact the writer of this column: David Pauly in Fort Myers, Florida dpauly@bloomberg.net

Last Updated: January 12, 2007 00:11 EST