Menu
Dell in the can over manipulated earnings

Dell in the can over manipulated earnings

Dell will restate its earnings for fiscal years 2003 through 2006 and the first quarter of 2007 after an internal audit found that certain employees had changed corporate account balances in order to meet quarterly financial targets, the company has revealed.

In the new financial results, Dell will cut a total of US$50 million to $150 million of net income from its previously reported cumulative total of $12 billion for the entire period. That translates to a reduction in Dell earnings of $0.02 to $0.07 per share from a cumulative total of $4.78 per share, Dell said.

The company also plans to fire, fine or reprimand certain employees for their roles in the scheme. While Dell did not name any people involved, it indicated that the investigation had reached high levels of management.

"We have taken what we believe to be appropriate actions with respect to personnel involved in this. That is up to and including terminations," said Don Carty, Dell's vice chairman and chief financial officer, during a Thursday conference call. The company would not say who had been fired in connection with the scandal or how many people it expected to terminate.

The investigation found that Dell staff adjusted account balances and provided incomplete or incorrect information to internal or external auditors, typically toward the end of the quarter, Carty said. There was "evidence that certain adjustments appeared to have been motivated by the objective of attaining financial targets," he said.

"Often these adjustments were relatively small; sometimes they did involve larger amounts," he added.

Though most of wrongdoing involved shifting around the reporting of revenue and liabilities, in one instance, there was fraudulent revenue booked that investigators had to reverse, Carty said. He did not provide details of that transaction, except to say it had occurred "overseas."

Dell began the audit in August 2006 after learning it was the target of an accounting investigation by the US Securities and Exchange Commission (SEC). A huge team of as many as 125 lawyers and 250 accountants worked on the investigation, reviewing about five million documents and interviewing several hundred employees.

The SEC has met "frequently" with Dell executives throughout the internal audit, Carty said. "The restatement is certainly going to address the issues found in the investigation, but the SEC investigation is ongoing," he said.

Dell has not filed its quarterly financial statements during the course of this audit, but it now expects to file these statements by the first week of November, Carty said.

With the restatement, Dell hopes to put a dark chapter of the company's history to rest. Mired in the financial scandal, the PC maker has lost ground to rival Hewlett-Packard over the past year, and in late January, former CEO Kevin Rollins stepped down to give founder Michael Dell a chance to revive his flagging company.


Follow Us

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags DellSEC

Featured

Slideshows

Meet the leading female front runners of the Kiwi channel

Meet the leading female front runners of the Kiwi channel

Reseller News honoured the leading female front runners of the New Zealand channel at the 2018 Women in ICT Awards (WIICTA) in Auckland. The awards honoured standout individuals across seven categories, spanning Entrepreneur; Innovation; Rising Star; Shining Star; Community; Technical and Achievement.

Meet the leading female front runners of the Kiwi channel
Meet the leading customer-centric Microsoft channel partners

Meet the leading customer-centric Microsoft channel partners

Microsoft honoured leading partners across the channel following a year of customer innovation and market growth in New Zealand. The 2018 Microsoft Partner Awards recognised excellence within the context of the end-user, spanning a host of emerging and established providers.

Meet the leading customer-centric Microsoft channel partners
Reseller News launches new-look Awards at 2018 Judges’ Lunch

Reseller News launches new-look Awards at 2018 Judges’ Lunch

Introducing the Reseller News Innovation Awards, launched to the channel at the 2018 Judges’ Lunch in Auckland. With more than 70 judges now part of the voting panel, the new-look awards will reflect the changing dynamics of the channel, recognising excellence across customer value and innovation - spanning start-ups, partners, distributors and vendors.

Reseller News launches new-look Awards at 2018 Judges’ Lunch
Show Comments