AfterDawn: Tech news

Dell will settle over accounting fraud

Written by Andre Yoskowitz (Google+) @ 23 Jul 2010 0:54 User comments (8)

Dell will settle over accounting fraud Dell and its founder Michael S. Dell have agreed to pay over $100 million in penalties to settle charges of accounting fraud brought forward by the SEC.
The computer maker was accused of misleading investors after it used money received from Intel to pad its bottom line. Without the money, the company would have likely fallen short of analyst expectations, thus leading to a hit on their stock price.

Intel paid Dell the money as "rebates," part of shady agreement that would ensure Dell used Intel processors in their computers and not rival processors from AMD.

Dell eventually started offering computers with processors from AMD, and Intel cut the rebate checks. This led to a downturn in the computer maker's finances, and a hit on the stock share price, losing investors money.

"Dell manipulated its accounting over an extended period to project financial results that the company wished it had achieved but could not," says Christopher Conte, associate director of the S.E.C.s enforcement division. "Dell was only able to meet Wall Street targets consistently during this period by breaking the rules."

In a separate lawsuit, filed in 2007, Dell was sued over selling faulty computers to not only individual consumers, but also to corporations and big universities who needed Dell's OptiPlex business units.

Over the last couple of months unsealed documents in the long-standing case have been revealed, showing that Dell employees knew that the company was selling faulty units, and decided to instead play off the issues, allowing the corporations and schools use the computers, at risk to their business.

There will likely be a settlement in that case soon, as well.

Previous Next  

8 user comments

123.7.2010 4:46

Just goes to show you...buying Dell is always a bad idea; even if you are just buying stock.

223.7.2010 6:52

true, but their high end monitors are the shiznit, and that dell thunder/lighting coming out, not to mention the streak.

323.7.2010 10:15

Buying Dell is just buying superior products from a sadly corrupt business. So many businesses are like this though, that it's only the super-corrupt that are really worth boycotting, and Dell aren't bad enough to belong in that category, and Intel are borderline.

423.7.2010 10:46

I actually was happy with my laptop I bought in 2005, I spent $3000 for it, and it still runs windows 7 ultimate with no issues at all. But then spend a shit load of money on any laptop and it should if you maintain it properly last a long time.

But i hate Dell as a company; they always robbed the public, and robbed employees too.

523.7.2010 13:09

Dell's best parts are just stripped-down OEM versions of parts you can buy anywhere else for less money. They cut corners on everything, and if something actually works, then it is pure luck. The only reason to even consider them is for a laptop...and that is only because the "DIY" laptop options are terrible, and there are only a few laptop makers that can give you anything decent (at least in specs) for under $1000.

623.7.2010 17:20

they let the banking industry do this freely but dont worry they got dell

724.7.2010 14:16

Originally posted by Mysttic:
I actually was happy with my laptop I bought in 2005, I spent $3000 for it, and it still runs windows 7 ultimate with no issues at all. But then spend a shit load of money on any laptop and it should if you maintain it properly last a long time.

But i hate Dell as a company; they always robbed the public, and robbed employees too.
I feel bad for you. My new $600 laptop (the brand is irrelevant) probably beats the pants off yours. My policy: Never spend too much on tech.

There's nothing wrong with Dell, at least nothing MORE wrong with Dell than any other large manufacturer (assembler) of computers. The reason their stock isn't doing well is BECAUSE of their decision not to keep selling AMD. They should have stayed the course despite losing Intel's bribes. AMD owns on value, which is all that matters IMHO. Big frigging deal if your company can make the fastest processor in the world? Tomorrow AMD will come out with one just as fast for a third the price!

816.8.2010 18:34

Nearly every PC maker was hit with the faulty capacitors that flooded the market. I know I had bad Asus/Abit/Soyo motherboards with the same faulty caps that Dell had. The whole industry knew it (or had to).

I prefer to build my own computers because I hate proprietary parts that are not replaceable from off the shelf vendors, but for a business, I liked supporting Dell laptops/desktop WAY more than Compaq, HP, or IBM back when I did that sort of thing.

Dell usually has pretty tempting offers on their low end machines with a flat screen monitor, but never ever get the model that doesn't have the PCIE video slot (I've pretty much seen this type of low end PC from HP/Acer/eMachines/etc as well, tho...so it's not a Dell only thing).

Comments have been disabled for this article.

News archive