Business Highlights

SAN FRANCISCO — Apple Computer Inc. warned Thursday that it may have to revise its profits dating back to 2002 in a worsening stock option scandal that has cast a harsh light on Silicon Valley’s compensation practices.

Without providing specifics, the Cupertino, Calif.-based maker of Macintosh computer and iPod music players said it had uncovered enough evidence of mishandled stock options to raise doubts about the accuracy of financial statements dating back to Sept. 29, 2002.

During this stretch, Apple has enjoyed one of the most prosperous periods in its 30-year history. Fueled largely by steadily rising sales of its ubiquitous iPod, Apple has reported $3.1 billion in profit during the past four years.

Apple first raised a red flag about the way it accounted for stock options in late June when it announced an internal investigation into a series of "irregularities.”

Some of the nettlesome stock options were given to Steve Jobs, Apple’s renowned chief executive, but he voluntarily canceled those in 2003 before cashing them in.

After digging deeper, Apple uncovered enough new problems to prompt the company to hire an outside lawyer to take over the investigation and notify the Securities and Exchange Commission about its findings. Apple hopes to complete its accounting review as quickly as possible, said company spokesman Steve Dowling. In the meantime, Apple may miss a deadline for filing its latest quarterly report with the SEC.

Apple’s iPod sweetens its ride with top automakers

SAN JOSE — In the latest boost to its dominance in portable music players, Apple Computer Inc. is teaming with General Motors Corp., Ford Motor Co. and Mazda Motor Corp. to integrate the iPod into car audio systems.

GM and Ford are the nation’s No. 1 and No. 2 automakers, and the new alliances mean the iconic audio gadget will now be compatible with more than 70 percent of the new 2007 model vehicles sold in the United States, Apple said Thursday.

Mortgage rates dip for second straight week

WASHINGTON — Mortgage rates around the country dipped for the second week in a row, a dose of encouraging news for people thinking about buying a home. Mortgage company Freddie Mac, in its weekly survey released Thursday, said that rates on 30-year, fixed-rate mortgages dropped to a nationwide average of 6.63 percent for the week ending Aug. 2. That was down from last week’s rate of 6.72 percent and was the lowest since mid-June.

Economists viewed the back-to-back dips as a nice reprieve from rates that have slowly moved upward this year.

"Although lower rates are a welcome sight, we still feel that the 30-year, fixed-rate mortgage rate will drift up and down somewhat over the next few months, but will average less than 7 percent for the year,” said Frank Nothaft, Freddie Mac’s chief economist.<