SEC probe to delay Dell results

11-09-2006

by Emmet Ryan

Major Irish employer and computer manufacturer Dell has delayed filing its latest quarterly report with the US Securities and Exchange Commission (SEC).

Dell said it is suspending share repurchases and delaying filing the report amid an expanded government probe of the PC maker's accounting. The Texas-based company said it was unable to file its report for the quarter ended 4 August because of questions raised in connection with the recently disclosed informal probe of the company's accounting by the SEC.

The informal investigation revealed that Dell may have misstated prior financial reports, which may have affected previously-reported financial results.

The request by the SEC joins a similar request by the US Attorney for the southern district of New York. The US Attorney has subpoenaed documents related to Dell's financial reporting from 2002 to the present. The market reacted negatively to the news with shares falling to USD20.77 in pre-trading, a drop of 4.1 percent.

Dell's own audit committee is currently conducting an internal probe. The company said it hopes to file the report as soon as possible but has yet to determine whether any restatements of prior financial reports will be necessary.

The company first disclosed the launch of an informal investigation by the SEC in August. The investigation has been underway for the past year and is examining Dell's revenue-recognition practices.

The computer giant employs 4,500 people in its Irish operation and last week announced 80 new jobs at its European corporate customer support centre in Dublin. The centre was set up five years ago and already employs 340 people. Dell came to Ireland in 1990. The company's European manufacturing facility is located in Limerick with sales, marketing and support operations based in Cherrywood, Co Dublin.

This delayed report is the latest in a series of recent setbacks for Dell. In the last year the company's market value has dropped by 37 percent to about USD49.2 billion. ENN reported in August that Dell's second fiscal quarter net profit had halved compared to the same period last year: USD502 million against USD1.02 billion a year ago. This equates to a 46 percent drop in earnings per share from USD0.41 to USD0.22 for the respective quarters.

Dell suffered another blow last month when it was forced to recall 4.1 million laptop batteries worldwide that can potentially overheat and pose a fire hazard.