Aug. 4 (Bloomberg) -- Shares of Apple Computer Inc., the maker of Macintosh computers and iPod music players, fell after the company said it will probably restate earnings following an internal investigation into options backdating.

Apple yesterday delayed its quarterly filing with regulators while it reviews the option grants. The Cupertino, California- based company said it hasn't determined the size of the charge it may need to take, or which periods may need revising.

The company is among the most prominent companies embroiled in the stock-option scandal. Apple said in June it was investigating stock-option grants from 1997 to 2001, including an award to Chief Executive Officer Steve Jobs. That announcement caused the stock to drop 2.9 percent the next day.

``We know it's significant, we just don't know how significant,'' said Rob Enderle, an analyst at San Jose, California-based Enderle Group. ``We're going through what appears to be a very painful process of rediscovering how to account for certain things that were done about five years ago.''

Apple shares fell $1.29, or 1.9 percent, to $68.30 at 4 p.m. New York time in Nasdaq Stock Market composite trading and slid earlier as low as $64.96. The stock has lost 5 percent this year.

Stock options enable the holders to buy a specified number of the company's shares at a later date, usually at the price when the shares were granted. Executives receiving options make higher profits if the shares are granted at a low price.

`Disappointed'

``The market is disappointed but the reality is that the press sounds a lot worse than the reality of the impact on the business,'' Eugene Munster, an analyst at Piper Jaffray Co. in Minneapolis, said in an interview.

Executives probably received a total benefit of about $25 million from the grants, said Munster, who rates the shares ``outperform'' and said he doesn't own any. Any gains would be considered compensation and should be reflected as a cost on Apple's accounts.

``Effectively, they need to add back that $25 million in compensation expenses,'' he said. ``The impact of that number is very small.''

Apple won't comment further until the probe is complete, Steve Dowling, a company spokesman, said. ``The investigation is ongoing, we're focused on resolving the matter as soon as possible.''

Federal Probes

Federal investigations have ensnared more than 80 companies including UnitedHealth Group Inc. and Home Depot Inc., and may involve dozens more, according to U.S. officials, securities lawyers and executive-pay specialists. The probe has turned into the country's biggest investigation of corporate malfeasance since an inquiry into improper mutual-fund trading three years ago led to $4.3 billion in penalties.

Broadcom Corp., an Irvine, California-based maker of computer chips, so far reported the biggest restatement resulting from options probes. The company said on July 14 that it will incur added costs of $750 million to account for options granted from 2000 to 2002.

Apple's announcement widened the scope of an internal probe initially focused on 1997 to 2001. The company said ``additional evidence of irregularities'' mean financial statements from the periods starting Sept. 29, 2002, can't be relied upon.

``This one seems to be an identifiable inconsistency that they are going to fix and has nothing to do with what's going on right now,'' said James Grossman, a fund manager at Thrivent Asset Management in Appleton, Wisconsin. The firm oversees $65 billion including Apple shares. ``Compared to other cases, this isn't as egregious.''

Lawsuits

Shareholder lawsuits, filed in California after Apple announced its investigation, claim Jobs, 51, improperly benefited from a 7.5 million-share grant.

Option grants to Jobs were canceled in 2003 after the stock plummeted, and Apple compensated him with restricted stock, the suits say.

``People panicked at first at the thought Steve Jobs would be forced out, which would be a huge detriment,'' said Michael Church, who helps handle $2 billion at Church Capital Management in Yardley, Pennsylvania, including Apple shares. ``I can't see how he would be directly implicated.''

Apple on July 19 reported third-quarter profit rose 48 percent, citing higher sales of Macintosh computers and iPod music players. Net income increased to $472 million, or 54 cents a share, and sales gained 24 percent to $4.37 billion.

The company will hold its regular conference for developers next week in San Francisco, an event where it often gives details of new versions of Macs or iPods.

``At the end of the day, investors are going to be focusing on what new products are coming, and we think the product road map is pretty positive for Apple,'' Munster said. ``If you look at this in the context of the next six months, new iPods, stronger market share and ultimately a new phone which they have not come out with, I think that should benefit the stock.''

To contact the reporters on this story: Ian King in San Francisco at ianking@bloomberg.net; Jonathan Thaw in San Francisco at jthaw@bloomberg.net.

Last Updated: August 4, 2006 16:25 EDT