Dell admits to 4 years of financial malfeasance -- up to $150 million to be scrubbed

It's already been a rough year for Dell's dwindling market share much to the delight of HP and Apple. Now, as followup to the evidence of accounting errors and misconduct announced back in March, Dell has admitted that their senior / executive management regularly falsified quarterly financial returns from 2003 to 2006. In a filing with the SEC, Dell admits that "account balances were reviewed, sometimes at the request of senior executives, with the goal of seeking adjustments so that quarterly objectives could be met." In only one case did Dell actually invent sales numbers, usually, the shifty accounting involved the recognition of revenue earlier than appropriate. Dell must now reduce its reported net income for the period by as much as $150 million with the biggest downward restatements hitting Q1 2003 and Q2 2004 by 10 to 13 percent -- other quarters are expected to be 5 percent or less. It's unclear whether any of the management responsible for, or engaged in this malfeasance are still employed by Dell. Dell's CFO only said that "disciplinary action had been taken" and that current management and the board are "comfortable we have taken steps necessary to make sure this never happens at Dell again." Dell's stock is actually up a few points in pre-market trading which could be a sign that investors aren't too concerned by the piddley restatement (Dell posted $12 billion in net income during the period in question) and are stoked to see Dell finally move forward, undistracted. That is, if the SEC agrees. We'll see how the stock does once investors wake to the latest fetor to seep outta Austin this side of SXSW.

[Brandon Payton @ Aug 17th 2007 4:15AM]

Inevitably, the further you run from your sins, the more exhausted you are when they catch up to you.

[oshean @ Aug 17th 2007 4:23AM]

Hell hath no fury, like Dell's hell.

[oshean @ Aug 17th 2007 4:26AM]

cue AC/DC music

[Lucas @ Aug 17th 2007 4:18AM]

Ha ha ha ha ha!!! That's for leaving me on hold for many hours with your shitty customer service. I hope Dell dies a painful death.

[michas_pi @ Aug 17th 2007 5:29AM]

In before "Dude, you're getting a Dell!" reference. Oh wait...

[Icheb @ Aug 17th 2007 5:34AM]

Do you know what the word PARAGRAPH means?

[yoshi @ Aug 17th 2007 5:48AM]

I have a feeling that if I, as a small business owner, did that, I'd be spending some time in prison with the boys from the IRS visiting me for a nightly session of fun and games. I need to grow my business so I can get away with breaking the law like the big boys.

[Blake @ Aug 17th 2007 7:28AM]

Is that the kind of prison where they knock the soap out of your hand?

[AdamY @ Aug 17th 2007 7:48AM]

I think they should close its doors and give the money back to the shareholders.

Karma's a bitch, eh Mikey?

[andy @ Aug 17th 2007 9:16AM]

In order to satisfy me, they need to say that the execs paid back triple all of the bonuses they stole over the last four years. Enough of this "risk/reward" bs. What's the risk if you plainly steal, get caught, and nothing happens? Being an exec is a snap these days. Just ask Bob Nardelli.

[The Pepto Pimp @ Aug 17th 2007 11:09AM]

Preach on, brotherman!

[Devin @ Aug 17th 2007 1:06PM]

My question is this: Will anyone decline to buy Dell products in light of this malfeasance, and will Dell go down in flames like Enron because of this? I am an Accounting graduate student, just ordered my Dell because I still wanted a good deal (even after I read this article). I think they will survive so long as they stay innovative and keep prices low.

[Julie @ Aug 17th 2007 1:08PM]

Goodness! There were no bonuses taken away there were no fraudulent acts done! I emplore all of you to look at percentages. $150mil over 4yrs in a corporation that has a $32 BILLION dollar revenue????
Come on people! Grow up and get a life.

[andy @ Aug 17th 2007 11:08PM]

Julie, I'm a real live attorney for these corporate types. I'm all grown up with a life. That's why I understand that falsifying financial documents for the purposes of fraudulently obtaining a bonus is THEFT. It's THEFT, and they should have to make restitution to the owners (shareholders) and face the possibility of prison (in reality 3yrs probation because they've likely learned their lesson).

[Sam @ Aug 17th 2007 9:35AM]

Anyone else thinks he looks like Jefferson D'Arcy from Married With Children in that photo?

[johnzilla @ Aug 17th 2007 10:05AM]

No.

[Julie @ Aug 17th 2007 1:09PM]

Your comment posts amuse me. Do you realize that out of 32 billion dollars in revenue that 150 mil over four years is pretty much a grain of sand in a vast desert?!?~! There was nothing malicious going on and they are only asking Dell to correct there numbers over the next few reportings. Despite your hype, no one is going to jail, no one is getting shut down. Dell is and always has been and upstanding company. Lets see some investigation into HP or Apple's reporting of income and compare the numbers. This is only news hype. Do not fall into that trap.

[wmd @ Aug 17th 2007 1:37PM]

Misstating revenue is defacto stock manipulation and the SEC will slapp them down quite hard for it. That slap may well include jail time but I doubt it.

Dell shareholders also have cause for action both for the manipulation, since the overstatements prevented the stocks from being valued correctly and if bonuses were issued on a performance basis. Thaking those bonuses would be comitting fraud. That too is a criminal offense.

Don't speak so soon that no one is going to jail and that this is media hype. Manipulating revenue reports is serious criminal fraud.

[Debbie @ Aug 19th 2007 5:58PM]

I kinda liken Dell to being the In-Laws who've overstayed there welcome. Dell, you are so-over. Will someone pleeeeeease put a gun the Dells head and pull the trigger.