Dell today said it will delay filing its second-quarter financial filing due to questions raised from the investigation by the Securities and Exchange Commission (SEC) into the computer maker’s accounting and financial reporting.
Dell, whose board has also triggered an independent investigation by its
audit committee, said the United States Attorney for the Southern District of
New York has made a similar request for information as the SEC, subpoenaing documents related to the company’s financial reporting from 2002 to now.
The Round Rock, Texas, company said in a statement the inquiries have hinted
at the possibility of misstatements in prior-period financial reports
relating to accruals, reserves and other balance-sheet items that may affect
the company’s previously reported financials.
Dell said it is working with the audit committee and the company’s
independent auditors to determine if any restatements of past financial
reports will be necessary.
“We have not yet reached any conclusion on materiality as to these issues,”
said Don Carty, chairman of the audit committee, adding that Dell is
continuing to investigate the matter.
Dell said it plans to file its Form 10-Q report as soon as possible but did
not speculate when that could come to pass.
In other changes related to the investigations, the company suspended its
ongoing share repurchase program until further notice and has postponed the
financial analyst meeting slated for Wednesday this week.
Dell will keep its scheduled technology day on Tuesday in New York to show
off its latest products and services and get face time with the media and
technology analysts.
Delaying earnings reports has become a regular activity for companies in the
wake of a slew of accounting investigations involving a practice called
stock option backdating.
In backdating, which is illegal when done to knowingly reap financial
benefits, executives tack on an earlier date for stock option grants in the
hope of the grants will accrue more value.
Currently, roughly 100 companies are under fire for such practices.
Former executives for companies Brocade Communications Systems and Comverse Technology are being prosecuted by the federal government and state
attorneys.
It isn’t yet known whether Dell’s fiscal accounting issues are related to
stock options, but it is still a blight on a company that has been a
technology darling for years.
The company, which competes with IBM , HP
, Sun Microsystems
, Lenovo and others in
the computing market, has been stung by poor service reports in recent years.
But more recently, Dell recalled
4.1 million notebook batteries manufactured between 2004 and 2006 after a
Dell laptop allegedly exploded, causing a truck to catch on fire.
Dell executives will no doubt use tomorrow’s technology day in New York to
shine positive light on what is working for the company.
Dell Delaying Earnings Report
