Dell probe finds misconduct and accounting errors

An internal investigation at hardware giant Dell has found evidence of misconduct and accounting errors, forcing the company to delay filing its annual financial report with stock market regulators.

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An internal investigation at hardware giant Dell has found evidence of misconduct and accounting errors, forcing the company to delay filing its annual financial report with stock market regulators.

Dell issued an statement confirming the situation on Thursday, after the US stock market had closed.

The company - once the world's largest seller of laptop and desktop PCs - has stumbled recently, with profits falling as it struggled with an accounting investigation by the US Securities and Exchange Commission (SEC).

In January, founder Michael Dell ousted his successor Kevin Rollins and returned as chief executive in an attempt to reverse the company's fortunes.

Now Michael Dell will face an even tougher challenge. One of his first moves was to win a reprieve when the Nasdaq stock exchange threatened to de-list the company's stock because it had missed three deadlines for filing its quarterly earnings reports with the SEC.

The company now says it will miss the extended date as well. Dell will delay filing its return for the financial year ending 2 February beyond the original deadline of 3 April and the extended deadline of 18 April.

Dell did not say what sort of misconduct it had found or who had committed it. In a brief statement, the company said only that an audit committee assigned to investigate the SEC charges was not yet finished with its task, but had "identified a number of accounting errors, evidence of misconduct, and deficiencies in the financial control environment".

Dell management had not yet determined whether earlier financial results will have to be restated to correct the errors, the statement said.

A hint about the nature of the misconduct may come from a lawsuit filed in the US courts on 31 January by shareholders, alleging that a small circle of executives arranged for Dell to accept secret payments from chip maker Intel in exchange for using only Intel processors in Dell PCs.

The lawsuit also said the managers had used inside information to reap multimillion dollar profits by selling stock options at auspicious times.

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