Schaeffer's Market Observation Features Apple Computer and Black & Decker.

CINCINNATI -- Today's Market Observation features Apple Computer (NASDAQ:AAPL) and Black & Decker (NYSE:BDK). Schaeffer's Market Observations are market-based reports that provide insight and analysis from a unique and unbiased perspective. Market Observations are published on www.SchaeffersResearch.com - the home of Bernie Schaeffer and Schaeffer's Investment Research. To receive a free email notification each time a new commentary is written about one of the featured stocks or any of your favorite stocks, click on the following link: http://www.schaeffersresearch.com/redirect.aspx?CODE=PROAW13M&PAGE=1.

Apple Computer

Ever the attention hound, Apple Computer (NASDAQ:AAPL) is once again back in the headlines this morning. And once again, things don't look all that rosy for the purveyor of iPods. Early this morning, AAPL announced that it has delayed filing its annual report with the Securities and Exchange Commission due to its ongoing investigation into stock-option grants.

You may remember from a piece I wrote back in June titled "Backdating Options: Why All the Attention?" that many companies are currently under the gun for this formerly prevalent practice of backdating options (if you are not familiar with backdating, I urge you to check out my article listed above for more information).

For a quick reference, however, backdated stock options are issued retroactively to coincide with low points in the stock price. This can increase the actual profit of the recipient of these options. While the practice in not necessarily illegal, it must still be disclosed and accounted for properly.

Turning back to AAPL, the company noted that it needs to restate historical financial statements to record charges for compensation related to option granting practices. As a result, the company was unable to file its 10-K Form by the December 14 deadline.

In June, AAPL acknowledged that some of the stock options awarded to employees might have been mishandled, and launched an investigation that found accounting irregularities between 1997 and 2002. Steve Jobs, AAPL founder and CEO, was found to be aware of some options backdating.

Currently, the company expects to file its 10-K report and its quarterly report for July 1 in one month.

Black & Decker

For the third time since July, Black & Decker (NYSE:BDK) has cut its full-year, per-share earnings outlook. While BDK's previous earnings view between $7.00 and $7.05 had been in line with analysts' expectation of $7.01, the company's new number is significantly lower: $6.50. BDK also took the old hacksaw to its fourth-quarter earnings view, chopping it down to $1.30 to $1.35 per share from its previous forecast between $1.85 to $1.90 per share.

The reason for the gloomy outlook, according to the company, is a weak housing market in the U.S. and little demand for discretionary goods. Orders from key retailers have reduced. BDK expects a sales decline of eight percent in the fourth quarter. Based on year-earlier revenue of $1.73 billion, the company sees revenue of $1.59 billion.

Nolan D. Archibald, Chairman and Chief Executive Officer, commented that "our U.S. sales have been significantly lower than we anticipated. We expect that the Power Tools and Accessories segment will report a double-digit rate of sales decrease for the quarter, driven by the U.S. business. The Hardware and Home Improvement segment and the Fastening and Assembly Systems segment will likely report that sales decreased at low-to-mid single digit rates." He added that "considering this environment, ongoing commodity cost pressure and the strong results we posted in early 2006, we face significant challenges in the first half of 2007. We will provide detailed guidance for 2007 when we announce our fourth-quarter results in January."

Archibald is disappointed in the weakened end-markets, but remains optimistic that new product innovations developed during 2006 will "bear fruit" as demand increases.

The stock closed Thursday at $86.92, up 37 cents from the previous day, but this earnings news has not been good to the power tool giant; before the opening bell, the stock has already dropped 5.7 percent to $81.93.

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Schaeffer's Investment Research, founded by Bernie Schaeffer in 1981, is a financial information and trading resources company. It publishes Bernie Schaeffer's Option Advisor, the nation's leading options subscription newsletter. The firm's contrarian approach focuses on stocks with technical and fundamental trends that run counter to investor expectations. The firm's website, http://www.SchaeffersResearch.com, is recognized as one of the leading information sources for stock and options traders and was cited as the top options website by both Forbes and Barron's. Click here for more details about Schaeffer's trading methodology: http://www.SchaeffersResearch.com/method.