TINMAN MICHAEL DELL and his glorious outfit of box shifters have had to pay huge wodges of cash to the financial watchdog US Securities and Exchange Commission (SEC) for letting down Mrs Beeton, his friends, his employees and him self with his company’s accounts.
Under the settlement, which does not require Dell to admit that he “dun nuttin” his company has to pay 0 million and he has to pay million.
If you read the financial press, Dell’s recipe for financial success was to take a company which was doing okish, take a large amount of Intel money to stay away from AMD and stuff it in until investors can’t see where your real profits are coming from.
Unfortunately for Dell it is not exactly legal as you have to tell investors where the cash is coming from, otherwise they will think you are doing it by selling computers.
It all started in 2001 when Intel began to provide additional ‘rebates’ to Dell and other personal computer makers that were not related to the contractual marketing program and that were different in character from ordinary course price discounts. No one disclosed these payments to the market, the SEC said.
“Disclosures omitted material facts relating to Intel’s payments to Dell, which…soared from million in 2003, which was 10 percent of operating income, to more than 0 million in 2007 which was 76 percent of operating income.
“The increase in Intel payments to Dell coincided almost exactly with AMD’s introduction of its Opteron CPU that was, in the view of many, technologically superior to Intel’s competing CPU,” the SEC says.
The SEC said the dodgy payments enabled Dell to meet its quarterly earnings targets. Everything was going swimmingly until Intel decided that it would not pay more than 70 per cent of Dell’s earnings and more. Dell said that profits had dropped but again protected Intel by not saying the real reason why.
Dell said that in addition to the fine the company also has agreed to, “perform certain undertakings, including retaining an independent consultant, to enhance its disclosure processes, practices and controls.”
It points out that Michael’s settlement is limited to “negligence” rather than “fraud” and as such can continue to be a director of the company. If only everyone whose actions are deemed negligent could continue in their job.
Sam Nunn, presiding director of the Dell board, said, “The board believes that this settlement is in the best interest of the company, its customers and its shareholders, as it brings a five-year SEC investigation to closure.
Nunn added that Dell’s board reaffirms its unanimous support for Michael Dell’s continued leadership and the management team in its, “ongoing commitment to transparent accounting, integrity in financial reporting and strong corporate governance.” In other words it is jolly good that the stable door is firmly bolted now it is a matter of finding that horse.
Dell said he was pleased to see the back of the case and added “We are committed to maintaining clear and accurate reporting of our periodic results, supporting our customers, and executing our growth strategy.”
Of course he does not have to admit doing anything wrong. Often people write cheques to regulatory authorities when they have not done anything. We expect all readers will have written the odd million dollar cheque for something they have not done. µ