Walter Shimoon was one of a select few who got a peek behind the veil Apple cinches tightly around its products.
His alleged attempt to profit illegally from that privilege caught up with Shimoon last week, when the former manager at Apple supplier Flextronics International Ltd was among three people arrested for supplying inside information to investors.
Shimoon, 39, was paid more than $22,000 to share non-public sales forecasts and other information about future products, including the iPad, according to the criminal complaint. His arrest underscores the difficulty faced by Apple Chief Executive Officer Steve Jobs, who runs the world’s most valuable technology company, in keeping multibillion-dollar products under wraps, said Charlie Wolf, an analyst at Needham & Co.
“That’s very hard to do when you have people in the supply chain who are going to get paid to supply information,” said Wolf, who is based in New York and recommends buying the stock.
As a supplier of parts for Apple’s devices, Shimoon, then a senior director at Flextronics, was privy to details about the computer maker’s product road map and sales numbers, according to the 39-page complaint unsealed last week in New York.
Shimoon, who made his first post-arrest court appearance in San Diego on December 17, lost a bid for bail. Bald and dressed in a white prison jumpsuit, he neither spoke nor entered a plea. His attorney told the judge that Shimoon’s wife is eight months pregnant and is a university professor in San Diego.
Inside information
Prosecutors say Shimoon provided inside information to clients of a Mountain View, California-based Primary Global Research LLC, which put him in touch with investors. His arrest was part of a nationwide investigation of illegal trading at hedge funds by Manhattan US Attorney Preet Bharara, the Federal Bureau of Investigation and the Securities and Exchange Commission.
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Apple, based in Cupertino, California, has jumped 52 per cent this year, helped by the iPad tablet, released in April, and the iPhone 4, introduced in June. It has more than tripled since Jobs introduced the iPhone in January 2007. Apple rose 27 cents to $320.88 at 9:33 am New York time in Nasdaq Stock Market trading. Steve Dowling, an Apple spokesman, declined to comment.
The complaint offers insights into the information, including internal sales projections, exchanged between Apple and the suppliers of product parts, sometimes long before a device is unveiled or hits store shelves. The data can help predict Apple’s financial performance and direction of its stock, Wolf said. Flextronics makes camera and charger components for the iPhone and iPad.
“That information is very valuable -- when Apple reports the stock usually goes into convulsions one way or another,” said Wolf, the Needham analyst. In 2009, Apple told Flextronics about a project known as “K48,” the codename for what would eventually become the iPad. In October that year, Shimoon shared some of the details with a person who is cooperating with authorities, calling it a “very secretive programme.”