Collateral damage
PC-maker Dell has been extremely close to chip giant Intel since its inception, so it's not too surprising to see Dell buffeted by the wake of the various investigations into Intel's business practices.
Dell has been the subject of an investigation by the US Securities and Exchange Commission (SEC) since 2005, and restated some of its accounts back in 2007 as a result of an internal probe. It looks like the SEC investigation is reaching its conclusion, and that Dell expects it to result in a settlement that could cost it up to $100 million.
In a statement yesterday, Dell announced it had recorded a $100 million liability in its first fiscal quarter in order to establish a reserve to cover a potential settlement with the SEC. The settlement would involve a civil action related to alleged fraudulent activities relating to Dell's accounts, prior to fiscal 2008, concerning certain aspects of its commercial relationship with Intel.
Additionally, founder and CEO Michael Dell is in discussions with the SEC regarding a settlement on the same matter for him individually. Any such settlement would not prevent Dell from acting as a director of a public company and, somehow, will be made without him either admitting or denying the SEC allegations.
"We are hopeful that these settlement discussions will achieve a comprehensive resolution in the near future. The independent directors of the Board have affirmed that Michael Dell will continue to lead the company as its Chairman and CEO, and he continues to have our complete confidence and support," said Sam Nunn, presiding director of the Dell Board.
Dell's shares were up a couple of percent yesterday, but lost that gain in afterhours trading.
