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."

Comments

Re:And yet the geeks/nerds/uninformed...

[clarkkent09]

Hate to spoil your rant but this has nothing to do with any monopolies but with incomplete disclosure to investors by Dell. It goes something like this: Intel essentially gives Dell a discount on its products - nothing wrong there. Dell puts the discount amount into a reserve fund. It later draws money from that reserve fund as needed to make the numbers in a given quarter. The problem was that it didn't disclose this information to the investors, making them believe that its quarterly earnings were higher than they actually were. At least that's how I'm reading TFA, please correct me if I'm wrong.