Dell concerns compounded by accounting mess
Dell on Monday said it will delay filing its second quarter fiscal report due to an ongoing informal investigation by the Securities and Exchange Commission over previously disclosed accounting irregularities.
The world's largest computer maker also said it will suspend its share repurchase program until further notice, compounding existing investor concerns over the company's fundamentals and forward looking prospects.
"Investigations have indicated the possibility of misstatements in prior financials, but Dell hasn't determined the materiality," UBS analyst Ben Reitzes told his clients on Monday. "We believe the delay adds another layer of concern to the Dell story."
According to Reitzes, Dell also postponed its analyst day for the second time this year. However, he said the meeting, which had been scheduled for Wednesday, was unlikely to have revealed any new turnaround plans. Instead, Reitzes believes it will take some time before Dell can effectively implement changes that would yield material improvements.
"With the market being driven by overseas, consumer and notebooks (areas where Dell is not advantaged), we do not see any turnaround near-term," he wrote in a research note. "We believe Buy-rated competitors such as HP, Apple and Sun are better positioned to take advantage of dynamics and deliver improving fundamentals over the next year."
The Round Rock, Texas-based Dell said it plans to file its second quarter report "as soon as possible."
The world's largest computer maker also said it will suspend its share repurchase program until further notice, compounding existing investor concerns over the company's fundamentals and forward looking prospects.
"Investigations have indicated the possibility of misstatements in prior financials, but Dell hasn't determined the materiality," UBS analyst Ben Reitzes told his clients on Monday. "We believe the delay adds another layer of concern to the Dell story."
According to Reitzes, Dell also postponed its analyst day for the second time this year. However, he said the meeting, which had been scheduled for Wednesday, was unlikely to have revealed any new turnaround plans. Instead, Reitzes believes it will take some time before Dell can effectively implement changes that would yield material improvements.
"With the market being driven by overseas, consumer and notebooks (areas where Dell is not advantaged), we do not see any turnaround near-term," he wrote in a research note. "We believe Buy-rated competitors such as HP, Apple and Sun are better positioned to take advantage of dynamics and deliver improving fundamentals over the next year."
The Round Rock, Texas-based Dell said it plans to file its second quarter report "as soon as possible."
Comments
I totally agree with SpamSandwich, the law was unclear and the law changed several times over the time period in question. This makes me feel better about the Apple situation as well because since the problem is so widespread, the punishments which are handed out will be small. If it were only one or two companies, they could afford to make an example, but when it is an entire industry, there is no way that the SEC will risk panic by imposing unduly harsh penalties such as jail time.
I again state that they will find Mr. Jobs clean as a whistle, he refused large grants of stock and options so many times that there is no way he would risk doing something illegal for personal gain when he could have very easily just have accepted the larger awards which the board was trying to give him. Shareholders who are suing Apple are idiots, when Jobs came aboard, the market cap was about 2 Billion, now it is above 60 Billion. If any CEO in the country deserves huge (Insanely Great) compensation, it is Steve Jobs. I am a long time Apple shareholder and I feel that Steve Jobs is worth every penny and I am sure that the other real shareholders (not day traders, etc.) feel the same way.
Baloney. If that many companies got it wrong, it sounds more like the law was unclear, and the rules changed.
Actually, they know what they are doing. There are legal ways of doing this, and illegal ones. They can backdate some options. But the main problem is that they can't lie about it to gain a tax advantage, either for the executives, or the company itself. If that is the problem, and it certainly seems so, then it is a big problem. The same problem Brocade has found itself in.
Apple seems to be in the same boat there, but we don't know if they are near the hole where the water is coming in.
Dell's other problems shouldn't be echoed at Apple, as even their own foward looking financial statement mentioned Apple as a company better positioned, for now, than Dell to grow share.
Apple seems to be in the same boat there, but we don't know if they are near the hole where the water is coming in.
I like that... a lovely turn of phrase.
First I must add the obligatory DELL IS TEH DOOM3D!!!111!!111
I totally agree with SpamSandwich, the law was unclear and the law changed several times over the time period in question. This makes me feel better about the Apple situation as well because since the problem is so widespread, the punishments which are handed out will be small. If it were only one or two companies, they could afford to make an example, but when it is an entire industry, there is no way that the SEC will risk panic by imposing unduly harsh penalties such as jail time.
I'm not sure where you are getting this information, but it is wrong.
Also, executives are going to prision over this problen, so it is not a small thing. It is fraud.
Don't forget that Apple has already stated that they will have to re-state earnings because of this, and delayed their finabcial statement, which is why they received the pro-forma statement that they would be de-listed if they do not hand it in by the new dare.
I again state that they will find Mr. Jobs clean as a whistle, he refused large grants of stock and options so many times that there is no way he would risk doing something illegal for personal gain when he could have very easily just have accepted the larger awards which the board was trying to give him. Shareholders who are suing Apple are idiots, when Jobs came aboard, the market cap was about 2 Billion, now it is above 60 Billion. If any CEO in the country deserves huge (Insanely Great) compensation, it is Steve Jobs. I am a long time Apple shareholder and I feel that Steve Jobs is worth every penny and I am sure that the other real shareholders (not day traders, etc.) feel the same way.
This has nothing to do with Job's value to the company. While it doesn't seem as though he will be involved, it's a separate issue.
The suits are obviously being done to try to get a few quick bucks. It's typical in these cases. I'm not for it, but it happens.
And anything that separates one from one's money is subject to a lawsuit. I get them all the time from stocks I've owned in the past when suites have been filed. Recently, I got one from a Global crossing suit that was won against them.
I like that... a lovely turn of phrase.
Why thank you.
I thought DellInsider was that way . --->
That's a good one.
I've never checked, but I wonder just how many sites like the Apple rumors sites there are for Dell, hp, etc.
As many as there are for the Amiga, for example?
Dell and others have plenty of lawyers to dissect every law in the books. The problem is that most of those lawyers are being asked to figure out ways of circumventing laws, not following them, so obviously they'll get burned every so often.
It is like speeding on the highway and human growth hormones in sports, you'll find it as much as you look for it.
melgross: for the heck of it I Googled "Dell fan sites" and the top three included one site for someone named Nancy O'Dell, one site for Role Playing Games, and a wired article about Apple Switchers!! Hilarious, Michael's company can't even generate enough of a fan base to find its way onto a search engine.
Wow, big business in an era of lax regulation will try to cut corners and act irresponsibly ... who would have thunk?
Surprising, isn't it? But the new Sorbane/Oxley (I know, I probably spelled it wrong), law is forcing companies to reveal the transactions when they never did before. About time. At least Enron et al, did some good. We'll just have to see how long it lasts.
Dell and others have plenty of lawyers to dissect every law in the books. The problem is that most of those lawyers are being asked to figure out ways of circumventing laws, not following them, so obviously they'll get burned every so often.
Yeah, the lawyers do as they are told. If they say that they don't think that something can be done, they are told to find a way. It may be convoluted, and sometimes they find a loophole, but often it's not legal. The problem here is that just as often, a client, and their lawyers can state that it was a legal "opinion", that was thought to be correct, and so they can walk out of it.
It is like speeding on the highway and human growth hormones in sports, you'll find it as much as you look for it.
True.
melgross: for the heck of it I Googled "Dell fan sites" and the top three included one site for someone named Nancy O'Dell, one site for Role Playing Games, and a wired article about Apple Switchers!! Hilarious, Michael's company can't even generate enough of a fan base to find its way onto a search engine.
What will help Apple is not hanging their customers out to dry every time they completely re-design the Mac. Or releasing products that are seriously flawed, and waiting for the class action lawsuit to be filed before taking action.
Who cares about Dell. Dell's demise will not mean a resurgence in Apple market share. It would / will benefit Alienware a lot more then Apple.
I doubt Dell is going away any time soon. Alienware generally doesn't appeal to or sell to the same people that Dell does. Besides, Dell owns Alienware.
Who cares about Dell. Dell's demise will not mean a resurgence in Apple market share. It would / will benefit Alienware a lot more then Apple.
What will help Apple is not hanging their customers out to dry every time they completely re-design the Mac. Or releasing products that are seriously flawed, and waiting for the class action lawsuit to be filed before taking action.
There is no Alienware anymore. It's now a division of Dell. Whatever affects Dell in one area, will affect them in others as well.
Besides, even if Alienware was still independent, it was a very small company that wasn't known much outside of the gamer community. It never directly competed in Apple's space. It competes with other small PC companies such as Voodoo.
Just a very small number of people are bothered when Apple comes out with a completely new design. If someone is, then they should buy a PC, or get Linux. This redesigning that Apple does is considered to be something the PC industry as a whole must adopt to stay competitive, so when you say is detracts, that's counter to most what people in the industry are saying right now.
And while Apple has had some problems, they don't have more than anyone else. It's just that the publicity around Apple is so much greater.
If you look, you should find at least the same percentage of problems with Dell.
I don't mind Dell that much. I'd like them more if you could choose what OS to have pre-installed on them. Not OS X of course cause lets keep that to the apples. But maybe select a version of Linux or even windows (if you really want it) when you're customizing your computer. Have the OS professionally installed by Linux pros and have a better support team specialized in handling day-to-day problems. Or keep that thing that they have now where they take control of your computer online so they can resolve issues. But keep that crap on dells. i dont need or want someone on my computer remotely.
Sure. A good class action lawsuit could be made of MS and the PC companies not allowing the install of a still sold product on consumer machines.
For example. When XP came out, large business's could buy machines with 2000 installed. Not consumers though. They HAD to buy machines with XP.
The same thing will be true of Vista. Only large business's will be allowed to continue to buy machines with XP installed. All consumers and small businesses that must buy retail, will be required to get machines with Vista. No choice to be able to buy a still sold product.
Besides, even if Alienware was still independent, it was a very small company that wasn't known much outside of the gamer community. It never directly competed in Apple's space. It competes with other small PC companies such as Voodoo.
Yeah, I don't get what makes some people believe that Alienware was ever a big player.
Who cares about Dell. Dell's demise will not mean a resurgence in Apple market share. It would / will benefit Alienware a lot more then Apple.
What will help Apple is not hanging their customers out to dry every time they completely re-design the Mac. Or releasing products that are seriously flawed, and waiting for the class action lawsuit to be filed before taking action.
Hey rain, chill a bit, are you from Vancouver or another transplant from back East?
Dell isn't about to have a demise, but in the mindshare of the average consumer who only has room to think of Dell and HP and maybe Apple, any dimming of Dell will make the others look better by comparison. HP seems to be taking most of Dell's losses so far with Apple getting a little here and there.
Here's the deal. If Dell looses, let's say, 10% of the desktop market and HP and Apple can split that even 70:30, Apple doubles its market share! That is Mac Math. And they have to get what they can before China figures out desktops.
I'm not sure where you are getting this information, but it is wrong.
Also, executives are going to prision over this problen, so it is not a small thing. It is fraud.
Don't forget that Apple has already stated that they will have to re-state earnings because of this, and delayed their finabcial statement, which is why they received the pro-forma statement that they would be de-listed if they do not hand it in by the new dare.
This has nothing to do with Job's value to the company. While it doesn't seem as though he will be involved, it's a separate issue.
The suits are obviously being done to try to get a few quick bucks. It's typical in these cases. I'm not for it, but it happens.
And anything that separates one from one's money is subject to a lawsuit. I get them all the time from stocks I've owned in the past when suites have been filed. Recently, I got one from a Global crossing suit that was won against them.
I don't remember anyone going to jail related to the following two cases. Henry Blodget never went to jail. I think that in these cases the fraud was much worse, especially when you consider the losses in dollar terms and how widespread it was. While my information is pretty much a guess based on precedent, at this time, I believe that it is just as presumptuous for you to say that I am completely wrong. I never said that there wouldn't be hefty fines, but I believe they will not do anything which will overly disrupt the industry a la the Global Settlement.
From Wikipedia article on Eliot Spitzer:
* Global Settlement (2002): Spitzer sued several investment banks for inflating stock prices, using affiliated brokerage firms to give biased investment advice and "spin" initial public offerings of stock by offering them to CEO's and other influential members of the business community. In 2002, a settlement of these lawsuits was negotiated by Spitzer, federal regulatory bodies, stock exchanges, and the investment banks and brokerage houses in question. The result was $1.4 billion in compensation and fines paid by the brokerages and investment banks; new rules and enforcement bodies created to govern stock analysts and IPOs; and the insulation of brokerage firms from pressures by investment banks. Ten firms paid fines to settle the case: Bear Stearns, Credit Suisse First Boston, Deutsche Bank, Goldman Sachs, J.P. Morgan Chase, Lehman Brothers, Merrill Lynch, Morgan Stanley, Salomon Smith Barney, UBS Warburg.
* Late Trading & Market Timing Investigations (2003): Investigations by the office of Eliot Spitzer beginning in 2003 uncovered mutual fund brokers allowing select clients privileges deprived to ordinary customers. Spitzer targeted two practices in particular: "late trading" which allows hedge fund investors to file trades at the previous day's price after the market close, something ordinary customers cannot do; and "market timing" which allows privileged investors to buy and sell shares in funds more frequently than allowed under the fund's rules. The implications of these practices are that the brokerages and a small number of investors profit at the expense of other fund shareholders. In essence, by placing winning trades the privileged investors diluted the profit pool available to all fund shareholders while they sidestepped their share of the pool's losses. Their trading also increased administrative fees borne by ordinary customers and caused fund managers to increase the cash they held to meet liquidity needs. Through a number of prosecutions and lawsuits, Spitzer secured more than one billion dollars in fines and remuneration for investors as well as forcing reforms to eliminate the practice.