DELL "misconduct"

Discussion in 'Stocks' started by Q12, Mar 29, 2007.

  1. Q12

    Q12

    didn't seem to phase the futures... interesting.


    By John Shinal, MarketWatch
    Last Update: 8:41 PM ET Mar 29, 2007


    SAN FRANCISCO (MarketWatch) -- Dell Inc. said late Thursday an internal probe into its past accounting practices uncovered errors and evidence of misconduct which may prompt the company to restate past results, sending its shares lower in after-hours trading.

    The No. 1 personal computer maker also said it would delay filing its year-end financial report with federal securities regulators, the third consecutive quarter it will miss reporting deadlines of the U.S. Securities and Exchange Commission.


    DELL23.39, +0.04, +0.2%) fell as much as 7% in late trading after the announcement before recovering to trade near $22.
    An audit committee of the company's board of directors "has identified a number of accounting errors, evidence of misconduct and deficiencies in the financial control environment," the company said in a statement.

    The inquiry findings add to the challenge for company founder Michael Dell, who reclaimed the chief executive role earlier this year after Dell posted several quarters of disappointing financial results amid stiffer competition from Hewlett-Packard Co. and other rivals.

    Dell's accounting practices are also being investigated by the SEC, and the company said in September it had received a subpoena from a U.S. attorney's office for documents. In December, Dell's chief financial officer, James Schneider, said he would resign.

    In February, a group of shareholders filed suit against Dell, alleging that the company manipulated its accounting to hide as much as $1 billion in illegal payments from chipmaker Intel Corp.

    AMD13.08, -0.30, -2.2%) has filed an anti-trust lawsuit against Intel alleging it made such payments to Dell and other PC makers in exchange for them using Intel chips rather than AMD's.
    Dell hasn't disclosed full details of what the SEC is investigating, beyond a statement last year that the probe might involve "accruals, reserves and other balance sheet items."
    The company didn't immediately respond to an e-mail seeking more information related to its statement Thursday.
    The Round Rock, Texas-based firm is among scores of tech firms investigating past accounting practices.

    Some of these inquiries have shown that companies changed the dates of stock option grants made to executives to prior dates on which the underlying stock price traded at near-term lows. The practice resulted in some executives reaping artificial windfalls.

    John Shinal is the technology editor of MarketWatch in San Francisco.