“Dell said on Thursday that it was in talks with the Securities and Exchange Commission to resolve allegations that it and its founder and chief executive, Michael S. Dell, engaged in financial irregularities related to the company’s dealings with Intel,” Miguel Helft reports for The New York Times. “The company said that any settlement would not bar Mr. Dell’s service as an officer and director of a public company, and would be made without admitting or denying the agency’s allegations.”
“The disclosure that the S.E.C. has been investigating aspects of the relationship between the two companies is new, as is its focus on Mr. Dell. A person briefed on the case, who agreed to speak on the condition of anonymity because the investigation is confidential, said that the S.E.C.’s allegations related to how Dell accounted for payments and rebates that it had received from Intel,” Helft reports. “The allegations are not criminal.”
Helft reports, “Dell also said that it had set aside $100 million for a possible settlement of these allegations, as well a separate long-standing investigation by the S.E.C. into its accounting practices. That investigation, which began in 2005 and became formal in 2006, has already led to admissions of misconduct by Dell and prompted the computer maker to restate financial results from 2003 to the first quarter of 2007… Dell also said that it would record a $100 million liability for the settlement of its long-standing accounting problems. As a result, it will reduce its net income in the first quarter of fiscal 2011 by the same amount, or 5 cents a share.”
“The relationship between Dell and Intel had already come under scrutiny in an antitrust lawsuit filed in November by Andrew M. Cuomo, the New York attorney general, against Intel,” Helft reports. “Mr. Cuomo’s lawsuit against Intel revealed e-mail messages between Mr. Dell and Paul S. Otellini, the chief executive of Intel, in which Mr. Dell complained of losing business to rivals using A.M.D. chips. In those conversations, Mr. Otellini reminded Mr. Dell that Intel had paid Dell more than $1 billion in the last year and said that was ‘more than sufficient to compensate for the competitive issues.’ According to the suit, Dell delayed buying chips from A.M.D. and Mr. Otellini later wrote an e-mail message to a colleague describing Dell as ‘the best friend money can buy.'”
Full article here.
MacDailyNews Take: Execs just love to use the email, don’t they?
[Thanks to MacDailyNews Reader “KenC” for the heads up.]