Dell has managed to get out of its long and painful legal battle with the SEC (Securities & Exchange Commission) by paying a $100 million fine (apart from $4 million personally from founder Michael Dell). This bought it a clean slate (at least from the S
Dell has managed to get out of its long and painful legal battle with the SEC (Securities & Exchange Commission) by paying a $100 million fine, apart from $4 million personally from founder Michael Dell. This bought the company a clean slate (at least from the SEC), without admitting that it did anything wrong. In case you were wondering what Dell did now, well, it’s about accepting payments from Intel for processor and chipset exclusivity.
If you are thinking “Oh no, not again…I’ve heard this news before!”, hold on, because this time around, it is about Dell not revealing information about these payments to their shareholders when disclosing the company’s financial earnings, though Intel’s payments were a big part of them. Big enough to meet its revenue targets at the end of the year, and big enough that former Dell CEO, Kevin Rollins, once likened them to a drug that Dell was dependent on. ("for 3 qtrs now, Intel money has made the qtr. A bad way to run the railroad....We are going to have to get off their drug..." Kevin Rollins to Michael Dell)
This is what the SEC alleges Dell did for years: “manipulated its accounting over an extended period to project financial results that the company wished it had achieved.” The period that SEC claims featured “accounting irregularities” was between 2002-2006, where at one point, Intel’s payments to Dell made up more than 76% of company’s quarterly earnings. Wow…
Below is a statement by SEC about the case:
The SEC alleges that Dell did not disclose to investors large exclusivity payments the company received from Intel Corporation to not use central processing units (CPUs) manufactured by Intel's main rival. It was these payments rather than the company's management and operations that allowed Dell to meet its earnings targets. After Intel cut these payments, Dell again misled investors by not disclosing the true reason behind the company's decreased profitability.
All in all, for a company its size, Dell seems to have gotten off lightly, neither paying an astronomical sum or being forced to admit its complicity. AMD fans will of course continue to use Intel’s former anti-trust “exclusivity” methods as the reason for AMD being behind on the processor game, and Intel can’t say anything to stop them. We just hope that major manufacturers like Dell don’t resort to such and other truly uncool actions, again. Nowadays, Dell sells computers with AMD, Intel and Via chips in them, and has a fight on its hands to clean up its image or begin losing customers, starting with corporations.