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Dell Settles With the SEC For $100M
Sri.Theo writes in with news of Dell's humbling settlement with the US Securities and Exchange Commission. The core of the complaint is that Dell took secret payments from Intel to keep AMD's chips out of Dell's machines. The SEC calls it "accounting irregularities" — Dell was dipping into this secret slush fund to bolster its results, quarter by quarter. At one point the payments from Intel made up 76% of Dell's quarterly operating income. "For years, Dell's seemingly magical power to squeeze efficiencies out of its supply chain and drive down costs made it a darling of the financial markets. Now it appears that the magic was at least partly the result of a huge financial illusion. ... According to the commission, Dell would have missed analysts' earnings expectations in every quarter between 2002 and 2006 were it not for accounting shenanigans. ... (Intel is expected to settle a long-running anti-trust case that has highlighted these payments in the next couple of weeks.) ... Michael Dell... and Kevin Rollins, a former boss of the company, agreed to each pay a $4m penalty without admitting or denying the SEC's allegations."
Dude! You're getting a cell!
There are no karma whores, only moderation johns
They'll be able to customize how the $100 million is paid. Stock? Overnight. Check? 3-7 days. All $20s? 3-6 month delay.
“ [dell] manipulated its accounting over an extended period to project financial results that the company wished it had achieved.”
Think about how people invested in dell over other companies thanks to their fake numbers. Something tells me that this is just a slap on the wrist compared to the actual damage done by these "accounting shenanigans".
Oh well. Guess that's just a cost of doing business.
My company currently runs a dell shop, running a mix of vostros, optiplexs, and over $100,000 in Dell servers.
I have been having issue after issue with the power supplies in pretty much every dell I run. We really like to run the SFF style units and they use a specially sized power supply. Dell refuses to acknowledge that there is an issue even though I have a 25% failure rate in power supplies at the one year mark. They offered to give me a SWEET deal of $120 for a replacement power supply (on a $400 unit), down from the $150 list.
So Dell has screwed consumers over on systems with bad capacitors, screwed consumers over with bad power supplies, cheated their shareholders by falsifying earnings, and competed unfairly by accepting bribe money from intel. bad company, bad products.
I get the reason why they did it, so they are not "criminaly negigent" but seriously? 4 years of having to restate all their earnings and eveything is cool?
I get why, eveyone made a killing off the stock price jumps, but still, somone isn't getting jail time for this.
Only a $100M fine? Shows that crime _does_ pay time and again..
While it certainly appears, from TFA, that tales of Dell's l33t supply chain ninja-ness were fraudulently overstated, the sheer magnitude of their dependence on Intel's "rebates" makes me wonder if they were the only one.
During that period, whenever I went shopping(either for personal use, or doing comparisons for employer bulk purchases) Dell always had very competitive prices; but not wildly different from comparable stuff from HP and friends. Either Dell's supply chain management absolutely sucked goats through capillary tubing, or some of their competitors must have had similar slush funds to work with.
keep on buying MonopolisTel chips. AMD processors are just as good, cheaper and you don't support the Microsoft of the hardware world. There actually is a good alternative here.
VermIntel has a lot of shills online, who visit online forums/message boards trying to downplay or dismiss the vast amount of illegal activity they've been up to.
And no friends, this isn't just from 2003 onwards. There are many OEMs, resellers and industry analysts who knew they were doing the same stuff way back in the late 80's at least.
Look at the Nvidia (another anti-competitive corp) vs Intel lawsuit... making OEMs buy atom chips with their accompanying chipset CHEAPER than buying the atoms alone.
Then there's the Vista-capable lawsuit... guess what happened there? Intel had a ton of useless slow video chips but forced Microsoft to allow them to call it Aero (Vista) capable.
Remember how much Intel cheats on benchmarks? How much they pay reviewers? How they cripple non-Intel CPUs in their "industry standard" compiler?
Remember that Skype deal? http://slashdot.org/articles/06/02/13/2015236.shtml
The list goes on and on and on. This is just off the top of my head.
Microsoft (that worthless monopolist scum) gets a well-deserved "fart in their general direction", yet Intel walks scott free.
Intel has been accused and convicted multiple times on several continents. They only just pay a small fraction of the money they fraudulently and illegally made and they walk with nary a geek/nerd/joe sixpack the wiser. They still have a sterling reputation.
Intel = Microsoft (of the hardware world).
Let's see how many slashdotters and/or people of conscience can bring themselves to even acknowledge this.
BTW, I've been Intel and Nvidia-free since 2001. I'm working on the windows part. (I'm a gamer)
Science : Proprietary , Knowledge : Open Source
I'm sick and tired of seeing these ethics-free corporations buy their way out of trouble without actually admitting to wrong-doing. If they aren't willing to sign a public statement that says, "We broke the law, but we'll save everybody a lot of trouble and money by simply paying for our criminal acts", the state should prosecute them to the full extent of the law, and use the well-established cowardice of market traders to drive down the stock price with carefully-timed announcements, added charges and perp-walks for the CEO's.
Enough of this bullshit! It's time to take the Free World back from these conscienceless scumbags.
I've calculated my velocity with such exquisite precision that I have no idea where I am.
They both get caught.
They both get punished.
Yet, they are teflon, and seem to come out unscathed. Still monopolists, too. (sad sigh)
All I can do is continue to use AMD and Linux, advocate AMD and Linux.
Wish Intel and Microsoft would fade away....
Uh, Linux geek since 1999.
"In its statement on the SEC settlement the company played down Mr Dell's personal involvement, saying that his $4m penalty was not in connection with the accounting-fraud charges being settled by the company, but was "limited to claims in which only negligence, and not fraudulent intent, is required to establish liability, as well as secondary liability claims for other non-fraud charges."" --TFA
Yes, because a deal that represents anywhere up to 76% of the companies quarterly earnings is SO likely to not have had Mr. Dell's personal and close attention when the deal was brokered with Intel. Oh, and gosh golly, it really must have slipped his mind when he was reviewing the shareholder reports before they got submitted.
"Sorry about that negligence and those pesky SEC and their rules. Oh, and I can keep my job too because I f'ing said so (notice the company isn't called Shareholder Computer Corp). Sincerely, M. Dell."
They colluded and engaged in a conspiracy in violation of SEC laws and they get a fine?
A fine? This is beyond pathetic. The SEC may possibly be the worst organization on earth.
He should have shut the company down and given the money back to the shareholders.
Qxe4
Why not just sell the Intel chips to Dell at a lower price? It would have accomplished the same thing. This seems like a Rube Goldbergian way of doing business.
I'm really frustrated with settlements. They seem to circumvent several basic principles of justice:
I've heard arguments for settlements such as, "We're not sure we could get a conviction. This lets us get at least a modicum of justice" Well if you're not sure, then maybe you shouldn't be trying to prosecute? It's for a jury to decide what's a just punishment, not the prosecutor.
Or, "It lets us safe the legal expense of prosecuting." Well, if the system is so broken that cases can't be fought within the financial means of the government, then shouldn't it dawn on someone that it's way broken for individual citizens with limited financial resources?
America was founded with some beautiful ideals, but I don't have a lot of respect for those who have evolved its legal practices.
no offense intended, but why would anybody be a "dell shop"? Sure, pick up a couple here and there, but what do they offer outside of:
1. Green + Purple plugs so you don't plug the mouse and keyboard in wrong.
2. Charcoal grey cases, so they don't look like whiteboxes (which they are).
For half the price you could have tonnes of "standby's" and be way further ahead. If you really wanted to use your money wisely, become a mac shop.
Right now, when a family member or friend asks me what type of computer to get, I start my reply with, "I wouldn't buy anything from Dell". But after that, I don't have much useful advice. Just knowing that Dell is an unreliable reseller of PCs isn't exactly the answer that they are looking to find out. I would recommend paying a little extra for reliability, but what manufacturers and resellers are reliable? If someone seems open to it, I recommend system76.com, but most are not. What say you, slashdot reader?
Dell was able to cut a deal with Intel, which isn't a crime. The SEC got all bent out of shape because of the lack of disclosure, but if Dell disclosed the sweet rebates they got on Intel processors, do you think Intel would give them the deal next time? No way!
It wasn't harmful to Dell stockholders until all of this was disclosed, and Dell stock went down the drain (OK, Dell stock was going down the drain anyway, but this didn't help). Oh, and then Dell started selling AMD-based systems, so I guess AMD was glad the deal was brought out in the open.
So now if Dell convinces a supplier to cut a great deal, but the supplier says "only if you don't tell everyone, or they'll ALL want the same deal" does Dell say, "No thanks, we'll pay the higher price."???
I need trepanation like I need a hole in the head.
54% of the Senate is lawyers. The rules are not made to achieve justice, but to delay the case long enough to pad the bill.
4 million dollars from Michael Dell - now THAT HAS GOT TO HURT. I'm going to send that fat boy some fucking ramen to tide him over.
Fascism trolls keeping me up every night. When I starts a preachin', he HITS ME WITH HIS REICH!
Why do some people spend two hundred dollars on a steak one night, instead of cooking one for themselves every night for a month?
Because one perfect steak is worth more than a month of mediocre steaks.
Now sometimes you don't get that even with a $200 steak. But there are reasons to spend more than is seemingly rational, when you place a high enough value on quality of results without having to put a lot of your own time into it.
You make a lot of good criticisms, but I think people need to be reminded from time to time that the world is not just about marketing, because after all in the end real people are buying (or not buying) products. Marketing can give you some boost but it basically can only amplify what is fundamentally true and good about a product - marketing that lies makes the consumer more pissed off and is more harmful than if you had just skipped marketing to start with.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
"The company neither admitted nor denied guilt as part of the settlement--a common phraseology in such deals."
How about a big FUCK YOU to Securities and Exchange Commission and the US Department of Justice! How about you dig a little deeper, get the dirt on the direct involvement by Michael Dell and the other board members during the 4-year period and put these schmucks in San Quentin Federal Penitentiary. If you can't find the evidence, just use your powers of Extraordinary Rendition to send a few of these folks over to the Middle East or Africa, a little water boarding, pull of some fingernails and you could get just enough information to find hard evidence to try and convict these people.
I could name a dozen good computer companies who disappeared during this time frame due to Dell's stellar rise in the computer market though shenanigans like this. Good computer companies that produced better products when under because they didn't cook their books like Dell did and didn't take bribes from Intel.
Like another poster said, the pure computer companies that did survive like HP (previously Compaq), Acer, etc. might have been involved in this also.
Intel did just settle the record breaking $1.4 Billion USD to the European Union's commission for violating anti-trust regulations or having to pay $1.2 Billion USD to AMD previously in a similar settlement.
I'm still glad to see that the NY State case against Intel is still on-going and it would be great if other states and companies jump on this bandwagon for lynching Intel since these guys have been playing some dirty games for a long time. Time to hold Execute Officers directly responsible for criminal and immoral decisions directly liable for their actions and orders. Too bad that our government is in the pocket of big corporations and that no real sanctions will be taken against these business scumbags.
Dell's success is now forever clouded by this and I think that looking at their shady little deal with Intel, I wouldn't put it past them if there was one going on right now with Microsoft for operating systems. Dell just did pull Ubuntu Linux OSes computers from their web site just as Linux is getting more acceptance by people due to Google's Android mobile OS success in the mobile market and also the upcoming tablet computer revolution. Microsoft isn't playing in this field and they are scared since they cannot compete.
Here's a way to give the consumers better competition and get rid of a shady computer manufacturer: Seek punitive damages that are two thousand+ times the actual damages (set actual damages at an amount equal to Intel payoffs to dell). Everyone wins, except Dell, and good riddance.
Their wrists must be smarting.
....such matters benefit the SEC but the end consumers who were hurt by it never see anything returned to them in compensation, though stock holders might.
Hmm, I think we should all quit doing business with the USA. The Russian and Itallian Mafia vendors are more honorable. At least they don't periodically fsck up the whole world economy the way the Yanks have a habit of doing.
Excuse me, but please get off my Pennisetum Clandestinum, eh!
Who stuck with Compaq/HP when Dell was cheaper? I had client after client after client show me the Dell loss-leaders in comp magazine ads, and I stuck with what was at the time a better, if ultimately sinking, ship. After this disclosure about Dell, I feel a bit exonerated.
NOTE: not that I'm particularly fond of capitalism. But it's even worse if the powerful are allowed to change the rules mid-game.
For that to be fair you can't just take the money from the companies bank accounts now [...]
If I bought dell shares two weeks ago why should I pay a fine while investors who profited and sold years ago are laughing to the bank?
Ah, but then, you as a prospective buyer wouldn't have any motivation to steer clear off those copanies playing dirty.
If I buy an "used car" for a "very good price" and it turns out to be a stolen car -- do you think I get to keep it?
Ah. Thought so.
Intel allegedly pays Dell not to use AMD chips?
Intel's payments allegedly make up 75% of Dell's quarterly operating income?
This doesn't add up. That would mean that Intel was not making any profit from one of their biggest customer, but would even be LOSING money by doing it?
Right. That kind of deal would be AMD's dream.
I would love to know how much upper level management & the CEO were making, including bonuses, during this period.
Yes, but AMD isn't clean either.
I've often been called a "troll" here for stating this simple fact, but AMD invented a certain "megahertz myth" that's a half truth and for a time invested massively in marketing based on that.
I once bought a notebook with an AMD CPU labeled "2200+", which was meant to imply it was faster than an Intel Pentium 4 with a 2200 MHz clock. That could be, for that specific benchmark AMD created, but it was not true for my own applications. For me, that "2200+" actually meant about "1500-".
It's one thing to state that a computer's performance does not depend on CPU clock alone. It's an entirely different thing to create a fake number and pretend that this number is an exact measure of performance.
In the end, the almighty market fixes things up, but not before innocent people waste money. AMD has stopped with that fraudulent practice of inventing fake numbers to pretend having superior performance. It's obvious now that it backfired on them, but many people, me included, bought computers with inferior performance based on those fake numbers.
Is this like sweeping dirt under the rug, or offshoring steel mills to China & Pakistan where almost-smart Americans no longer have to see the visible pollution that goes into manufactured products we use every day. As long as it's not happening in our backyard or where we can see it, it's good for the environment.
My baseline suggestions would be:
That, and two very important points.
Hard drives are the most unreliable part of modern PCs.Replace the hard drives once they're out of warranty. All you need is a good quality USB2 hard drive and HD Clone. Keep the old drives somewhere safe as your second line disaster recovery if you lose old data. If you have a lot of friends and family to look after, the small cost of your duplicator is easily amortised.
Get a large can of dust blaster and clean out the ventilation of laptops periodically (depending on environment). Component life can roughly double for each 10 degreee C fall in temperature, and removing dust from internal heatsinks can often achieve that.
From scarped cliff or quarried stone she cries "A thousand types are gone, I care for nothing, no not one."
Why isn't anybody commenting on the Intel side of this story? After all, they were the ones paying the bribes, or whatever you want to call that.
Having suffered from Intel's legal belligerence in the past, I know that they are pretty good at getting their will done. But, are not two parts required for this, er, illicit transaction to take place? What about the other? Doesn't Intel hold a position much more akin to a de facto monopoly in the PC and server markets than Dell? Isn't paying to keep the competition under sea level a pre-requisite for someone accepting to be paid for the same?
Intel is no longer the disruptingly innovative company it once (4004) was. It is a large evil behemoth for whom laws don't apply, they get their way every time and crush whoever they don't like. Nothing against large and going after you don't like; it's the evilness of their ways what I have a problem with. I'd be more than happy if the Governments looked at them more carefully, after they seem to have humbled Microsoft enough. Aren't those guys the largest part in the word "wintel"?
"Intel is expected to settle a long-running anti-trust case that has highlighted these payments in the next couple of weeks."
How much do you want to bet that Intel will also get a gentle slap on the wrist? And all of us paid more for CPUs than we should have for years, thanks to this collusion.
This sort of thing has happened over and over again in the semiconductor industry (e.g., RAM price fixing a few years ago). It's pathetic. These executives don't believe in a free market, they believe in scamming their customers at every opportunity.
How much do you want to bet that Intel will also get a gentle slap on the wrist? And all of us paid more for CPUs than we should have for years, thanks to this collusion.
These executives don't believe in a free market, they believe in scamming their customers at every opportunity.
Oh but I'm sure that consumers will target Intel and Dell for boycotts to ensure that they know that their activities are unacceptable. Right?
Individuals and corporations can sue for triple damages under http://en.wikipedia.org/wiki/Racketeer_Influenced_and_Corrupt_Organizations_Act.
However, Dell and Intel are trivial problems compared to the tera-scale kleptocracy of the US Congress and Wall Street. For example, Congress has spent $2.6T of Social Security trust funds, in direct violation of their 1992 law saying that those funds could not be spent on anything except SS payments. It has assisted the Fed in bailing out the 6 large banks to the tune of $12T. Almost every person in Congress has personal investments in some of those organizations.
We should apply RICO to Congress also and take back every cent of the $Ts they and Wall Street have stolen from the tax payer. All living Congress-critters and families should be made pennyless before the Congress-critters are executed.
OK, Dell cuts a secret deal with Intel for exclusivity. As a result, Dell sells computers more cheaply than its competitors, and makes larger profits. Dell reports the larger profits without being frank about where they are coming from. The customers get cheaper computers. Who is harmed? Dell's competitors and AMD... but there's nothing wrong with making a deal which harms one's competitors. As far as I can tell the profits Dell stated were quite real; I don't see why there's all this indignation over possible violation of securities rules.
So, in effect, the SEC has stated not just Dell, but Intel is guilty of unfair competition with AMD. If AMD doesn't jump on this with both feet, and sue the electrons off Intel and Dell, they're missing a bet. Their guilt has already been established.
PS: That 'perfect steak' was probably dropped on the floor at some point...and in the small restaurant business the hygiene rules are for losers.
The perfection in the steak is about how it is cooked, nothing else matters. I don't care if it was dropped on the floor or served on old cracked plates. Why should it matter?
For you dropping the steak somehow spoiled it despite it being perfectly cooked and edible. Why are you so shallow and wasteful? Would you not eat it if the same thing happened at home? It's attitudes like this that really bother me, the willingness to destroy something perfectly usable because of lofty yet meaningless standards.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
That only works if the customer can see what's good and true about a product. The financial companies do their best to make that impossible. Many retail goods companies do it too, eg. Apple censoring their own forums whenever they have a problem with a product.
You are seriously arguing that a company can hide anything now that internet forums abound? Apple censoring it's own forums was pointless on many levels, the foremost being that it obviously did nothing at all to keep people from hearing the story.
In the distant past you were probably correct, because a large enough company could collude with enough media entities to hide something. I have serious doubts that will ever be possible again. And that is what makes marketing only a component of product success (though an important one).
"There is more worth loving than we have strength to love." - Brian Jay Stanley
Ever wonder how there can be so many teenagers who think absolutely nothing of shoplifting? Look no further. They see crap like this over and over and make the rational decision to join the cheats rather than be cheated by them.
Morally speaking, when they steal from crooked corporations, it's hard to get terribly outraged. If only they could reliably know which corporations aren't crooked and avoid stealing from them. It's probably a short list these days.
If we alter the criminal punishment for individuals to be in line with corporate punishments, we could solve the employment problem. Just steal what you need/want and if you get caught, you have to work off 50-90% of the retail value and nobody thinks any worse of you.
Yep.
Now just waiting to see if the ARM netbooks continue to evolve to the point they become widely available, and easy to both install and run Debian on.
Then the x86 market can be competed with via ARM for netbooks and low power mobile computing.
Uh, Linux geek since 1999.
"Intel Corp (INTC.O) has agreed to stop using threats and bundled prices to hamper competition, settling charges that it illegally abused its market dominance in microprocessors, the Federal Trade Commission said on Wednesday."
http://www.reuters.com/article/idUSTRE6733I420100804
Uh, Linux geek since 1999.