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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
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.
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
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.
Negative moral value of force outweighs the positive value of good intentions.
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.
Actually, I think it is worse than that. Management conned shareholders about how efficient the company was, and therefore how much the company could be expected to earn in the future. Who were the victims here: the shareholders. The SEC investigates and now the company has to pay a fine. Whose money pays the fine? The shareholders. Put simply, the victims of this fraud get to pay the fine. Yah! Well done SEC, that will provide a real incentive to stop execs doing this in the future. [Yes, I know that Michael Dell has to pay $4M, but this is a small amount to him -- probably less than the fraud earned him]
The real "Libtards" are the Libertarians!
Are these the same shareholders that elected those who committed the fraud?
This seems like a Rube Goldbergian way of doing business.
You'll probably want to sit down for this.
Most of the business world based on lies, because most of the business world depends on marketing. And marketing, once you break it down, is manipulation. Why does your girlfriend want a common blood stained rock on her finger to symbolize fidelity? Why do some people spend two hundred dollars on a steak one night, instead of cooking one for themselves every night for a month? Why did everyone think that home prices should outpace inflation for eternity? Because businessmen are very good at lying to you, and conning you into buying things - ideas, products, services, status - that are worth far less than you think they are. That's where the money is.
When men thought capitalism could lead to liberty, the world was radically different. Manufacturing was just hiring enough people to hand-make everything that you could sell. There was no automation, no assembly lines. Laissez faire makes sense when it's hard to hide cheating. Plus, most of the population believed that charging interest was a mortal sin, because making money without working was immoral.
In today's world, people often have no idea of what they are buying. Bonds in financial markets are purposefully inscrutable. Required company filings are mangled beyond comprehension. As proof of this, just look at the subprime meltdown. One guy in California figured it out, and had to beg Goldman Sachs into creating the instrument that would allow him to short the housing market bonds. They had gotten so good at selling, and so bad at actually analyzing the market, that Wall St conned itself into trillions of dollars of debt. Luckily, "main street' - ie, the people who actually perform economic work - were there to bail them out. And Wall St, since a few of them had figured it out early, was busy selling the debt to public entities like schools, county governments, and retirement funds because they were easy marks.
And now, since a company's value is perceived to be the things Wall St says about it, you have a totally fucked up system, where companies are trying to seek the approval of these greedy, useless motherfuckers, who wouldn't know a day's work if it hit them in the mouth with a sledgehammer. We have an entire industry - the financial system - that doesn't perform any useful work. It's like a cancer on the economy, but one that's very successful in centralizing wealth into their own corner. We could replace all of the banks, insurance agents, and ratings agents with totally transparent branches of government, and get on with the business of really innovating - new technology to improve the world, not just figments of financial imagination, repacked and resold to sucker after sucker. But for some reason the American people think that would be the end of the world. Socialism! Communism! The loss of liberty and freedom and democracy!
I wonder who gave them that idea.
Michael, et al, controls the voting. We piddling shareholders have no real voice in the matter.
Although I build systems for family from parts off Newegg, there are problems with it. When a single component breaks what do they do? They have figure out which component it is then determine the brand and then call tech support for that component. Then they either have to troubleshoot that particular component and remove it from the computer to send it back. Who's going to help them? Me? So the more systems I build, the more calls I get for hardware and software because the user usually can't tell the difference (or they think they are one in the same). No thanks. If they buy a Dell, they get a system with the same length warranty on all the parts and one number to call for problems where they get a friendly English speaking foreigner to hold their hand while they troubleshoot and remove the offending component. Not a bad deal I say. Then again, I can build a kick ass system with kick ass parts that Dell wouldn't dream of using because of their profit margin, which is why my parents have a Lian Li case with an ASUS USB 3.0 board sporting an i7 930. The equivalent Dell would have been some ugly ass gaming rig worth its weight in gold.
"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.
Well, Intel's actions may have been illegal. Discounts are one thing; hell, everyone loves volume pricing, right? But if the terms are exclusivity, and if they're doing it with all the major vendors, then it becomes a monopolistic, anti-competitive behavior.
And let's not forget the actual amount of the discount; if you discount stuff low enough so that nobody can compete, and it just so happens that you're selling products below production price, the case could be made that you're doing something called "dumping" which is itself an anti-competitive behavior.
So there could be more to this than disclosure issues. I don't know for certain, but just as it's illegal both to give and receive bribes, there's probably good reason to decry the behavior of those compliant in the monopolistic behavior.
I'm not saying I know all the details, by any stretch; all I'm saying is that the GP poster has as worthy a point as your own.
The CB App. What's your 20?
Well, sort of. Mom and pop probably typically don't vote, but sign off on proxy statements to their investment bankers who do the voting. Any major investment banker with enough proxies to make a difference probably knew what was going on and made a mint themselves, but mom and pop didn't know.
Even if they did vote, they did so based on lies and fabrications. GIGO, you know. The only thing you can blame them for is getting into the stock market in the first place. Once you're in, it's an elaborate game that's tilted significantly towards insiders who openly flaunt the law because the penalty is pennies on the dollar.
The CB App. What's your 20?
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.
How do exclusivity deals with major vendors count as monopolistic? It just sounds like competition to me. I like AMD's competition to Intel, but just because Intel is the chip leader for PCs doesn't mean it should be hampered in trying to compete with its competition. Can you point me to an antitrust statute that says exclusive deals with manufacturers counts as anti-competitive behavior?
Part of the hardcore faithful who believed in Apple long before it was cool again to do so
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.
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.
No sig today...
If you buy a used car which you knew was stolen, then you are guilty of handling stolen goods and not only will you lose the car if the police find out, but you will also be punished for committing the crime.
The only problem is when people unwittingly bought a stolen car, the police will usually go easy on them in that case but they will still lose the car.
http://spamdecoy.net - free throwaway anonymous email - avoid spam!
Whether or not that's a good way to do things is irregardless.
You mean irrelevant. Irregardless is not a real word. Even if you want to argue that it is a real word, it does not mean the same as irrelevant.
Getting back on topic, Dell does some things right. The most important thing for me is support. People often ask me for advice on what computer that they should buy. I always say Dell, because if something goes wrong then you can go back to them for help.
This is especially important, because if something does go wrong, I don't want them coming to me to fix it. Just because I gave them advice on what to buy doesn't make it my responsibility. Since I have started suggesting Dell (and explaining why) I haven't had a single person ask me to fix things when they download the lasted virus or when they want to install some new bit of hardware. For me, that is priceless.
But no, I wouldn't ever buy a Dell for myself.
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.
Try putting in an IBM blade into a DELL chasis. Or get the IBM technician to configure your blade center to play nice with the DELL SAN.
If you want support you are all in on the hardware side...