RealTime IT News

Dell Caught Green-Handed?

Did troubled computer maker Dell accept then hide kickbacks from Intel designed to buy loyalty to the giant chipmaker? Those are the claims in an investor lawsuit naming founder Michael Dell and former CEO Kevin Rollins, among others.

The lawsuit, filed Wednesday in Austin, Texas, U.S. District Court by the William Lerach law firm, is on behalf of Dell shareholders that bought company stock between February 2003 and Sept. 2006.

Dell reportedly accepted up to $1 billion in "secret and likely illegal" e-Cap (exception to corporate average pricing) payments to cut its expenses, the lawsuit alleges.

According to the newspaper, the lawsuit claims the payments had "direct, material impact" on Dell's reported profits. Only 15 upper managers at the computer maker knew of the rebates, an arrangement Intel insisted upon to avoid antitrust questions.

In 2005 rival AMD sued Intel, pointing to the rebates Intel pays companies.

"We received the lawsuit and are analyzing it," Dell spokesperson Dwayne Cox told internetnews.com. Beyond that, the computer maker had no comment.

The legal claim names a total of 16 defendants, including Dell, Intel and PricewaterhouseCoopers, the computer maker's accounting firm.

Intel and PricewaterhouseCoopers were not immediately available for comment.

The lawsuit follows last year's word by Dell its accounting practices were the focus of an investigation by the Securities and Exchange Commission.

The lawsuit is just the latest hurdle Dell faces as it attempts to regain its top spot in PC sales.

Earlier this week, founder Michael Dell took the CEO reins back from Rollins, in hopes of righting a company faced with government investigations, disappointing financial numbers and a changing computer industry.