IBM Under SEC Probe Over Earnings Handling

IBM, the world's largest computer company, Monday said it is the subject of an informal probe by U.S. securities regulators tied to a controversy over how it disclosed news of recent poor results.

IBM shares dropped 1.2 percent in after-hours trading to levels just above two-and-a-half-year lows.

International Business Machines Corp. (IBM) of Armonk, N.Y., disclosed the existence of the probe in a one-paragraph statement that said it had been informed by the Securities and Exchange Commission (search) of the inquiry. The company also said it was voluntarily complying with the investigation.

IBM said SEC investigators were seeking information of how the company disclosed a plan to expense options on April 5 and a subsequent surprise quarterly earnings report nine days later in which IBM reported far weaker-than-expected results.

"The SEC has informed IBM that the informal investigation is not an indication that any violations of law have occurred," IBM said in the two-sentence statement.

An SEC spokesman declined to comment on IBM's statement.

IBM's shares declined 13 cents to $73.88 during regular session trading on the New York Stock Exchange (search). Following disclosure of the probe, the stock fell another 88 cents, or 1.2 percent, in composite after-hours trading. IBM shares hit recent lows immediately in the wake of the poor results in April.