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So Which Dudes at Dell are We Talking About?

Posted by: Peter Burrows on August 17, 2007

Dell finally completed its internal investigation yesterday, two years after the SEC first advised the company it had concerns over the PC maker’s books. The news was not good. Turns out the company repeatedly lied to auditors, to help it meet its quarterly targets. The numbers weren’t huge, but that’s still disturbing. And I, for one, feel the company should have been more specific about who was responsible. Here’s all it said:

we have effected personnel changes in our accounting and financial reporting functions, and there will likely be additional changes as we proceed. Consequently, many of the employees involved in the accounting processes in which errors were made are no longer involved in the accounting or financial reporting function. In addition, we have taken, or will take, appropriate remedial actions with respect to certain employees, including terminations, reassignments, reprimands, increased supervision, training, and imposition of financial penalties in the form of compensation adjustments.

I don’t know about you, but this doesn’t inspire much confidence in the absence of any names. It’s not that I’m calling for heads to roll, or for public humiliation of low-level employees. Also, I understand that the internal investigation is clearly designed to answer to the SEC, and any firm statements of guilt or innocence could come back to haunt the company if the SEC ever brings charges.

Still, this was an opportunity for the company to come clean with its shareholders, and take another step towards restoring confidence. As written, we’re lead to believe that underlings down in the finance department cooked the books all on their own. Does that pass your smell test? Many people will conclude that former CFO Jim Schneider, who was fired in January, was involved. But I bet many shareholders would have appreciated some statement about the involvment of Michael Dell and other top executives—even if it was to point out that the board does not currently believe they had any knowledge of it. Sources tell me that’s almost certainly the case. Still, the fact that Dell’s stock rose only $.39 today on a great day on Wall Street suggests that yesterday’s disclosure did little to calm investors’ nerves about Dell’s accounting problems.

Reader Comments


August 19, 2007 12:58 PM

Are you sure that there is nothing going on now? How's about overpaying a Taiwan supplier to take out money through the back door? It is possible and very hard to prove unless the SEC gets some help from the inside. Not saying this is going down, but anything is possible in this day & age.

I noticed the larger than normal orders at one supplier, just a thought.

Disclosure: Comment by a CrossProfit analyst and does not reflect the opinion of

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Bloomberg Businessweek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, and Douglas MacMillan, dig behind the headlines to analyze what’s really happening throughout the world of technology. Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.



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