Dell creates $100m reserve for SEC charges


Dell creates $100m reserve for SEC charges

Microscope contributor

Dell has taken a charge of $100m on its recently filed fiscal Q1 profits to establish a reserve for the potential settlement of a five-year Securities and Exchange Commission investigation.

The agreement, which includes the liability payment and a civil injunctive action against Dell, is the culmination of an SEC probe that began in 2005 related to its accounting practises and its dealings with Intel.

"As a result of ongoing discussions with the staff of the US SEC, the company recorded a $100m liability in its first quarter of fiscal 2011 to establish a reserve for the potential settlement," Dell stated.

The SEC enquiries made Dell look into its own accounting practises and in August 2007 it revealed that from 2003 to 2006 it was playing fast and loose with quarterly numbers to satisfy Wall Street expectations. As a result, it was forced to restate profits for that period, lowering them by $60m to $150m.

At the same time the Texan giant revealed its CEO Michael Dell is also talking to the SEC about his workings with chip giant Intel, which was sued for coercing the major PC vendors into using its products over AMD.

The discussion between Mr Dell and the SEC would "resolve allegations" about the company's relationship with Intel but any settlement would be made without admitting or denying the allegations.

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