Dell says they have completed their investigation and will be filing revised accounts in the next 2 months. Although they say they have addressed the findings of their own audit committee, the SEC is still investigating.

Dell Independent Investigation Completed; Will Restate Financials

The restatement is essentially pretty neutral overall. An interesting point within that is that earnings were overstated when Dell was CEO and understated when Rollins was CEO!

I remain suspicious of Dell.

Re: Dell restates

[quote author=“sleepygeek”]I remain suspicious of Dell.

You, too! 

Dell to restate four years of results on data manipulation
Marketwatch - August 17, 2007 7:59 AM ET

Dell warned that despite the conclusion of the company’s internal review, “the SEC’s investigation is ongoing, and there can be no assurance that there will not be additional issues or matters arising from that investigation.”

“Dell warned that despite the conclusion of the company’s internal review, “the SEC’s investigation is ongoing, and there can be no assurance that there will not be additional issues or matters arising from that investigation.”

For me there are two issues with Dell. One - can they repair their business model, which is out of date and not working well. Two, is there something lurking in the balance sheet that has been completely bypassed by the audit committee? There has been no plausible explanation for the huge share issue in January which is excluded from the official share count. I’m suspicious it may have been used to fill a hole in the balance sheet, although I’m not sure how.

The bigger problem IMHO is the failing business model. Let’s see what the SEC finds in the complex intra-organization transactions.

After all the nonsense put about in the press regarding SJ’s options at Apple, consider what actually happened at Dell, with not a peep from the press:

While Michael Dell was still CEO, and with him signing off the accounts, earnings were overstated by 10% and 13% in two quarters in 2003/4, in order to preserve the appearance of steady earnings growth. During this time Michael Dell was cashing in $2.8BN of options, paid for by new shareholders based on the audited accounts. Later, when Rollins was CEO, the SEC started to investigate (but the company did not disclose this), and compensating “accounting errors” mysteriously occurred, so that the result of the internal investigation is a negligible nett overall restatement, with Rollins having been ousted, we are supposed to think, for poor earnings growth.

Michael Dell never left the company, and surely knew what was going on all along, sharing an office with Rollins through the Rollins CEO period. Rollins was a hired hand - the wealth and power always lay with Michael Dell. (The financial engineering at Dell was what Rollins was hired for as management consultant).

Surely, the SEC should want Michael Dell out, and those options unwound. But there’s no sign of it.

[quote author=“sleepygeek”]While Michael Dell was still CEO, and with him signing off the accounts, earnings were overstated by 10% and 13% in two quarters in 2003/4, in order to preserve the appearance of steady earnings growth. During this time Michael Dell was cashing in $2.8BN of options, paid for by new shareholders based on the audited accounts. Later, when Rollins was CEO, the SEC started to investigate (but the company did not disclose this), and compensating “accounting errors” mysteriously occurred, so that the result of the internal investigation is a negligible nett overall restatement, with Rollins having been ousted, we are supposed to think, for poor earnings growth.

Surely, the SEC should want Michael Dell out, and those options unwound. But there’s no sign of it.

This is why the the net adjustment total shouldn’t matter. Was share price manipulation involved? Were the overstatements timed?

... and dell would be $17 by ... last may ? 

... and dell would be $17 by ... last may ? 

Patience… I still see Dell falling to $17 per share. The SEC investigation is continuing and sales continue to disappear. While server sales is showing strength, PC sales are plummeting in traditional markets. The big box retail strategy may meet with some success in terms of volume, margins will continue to be squeezed and there’s little IP to build a future compared to AAPL and HPQ.

It’s a matter of time before HPQ takes the US sales crown and a resurgent Apple is making big gains in the education space.

Does anyone see value that justifies a market cap of over $50 billion?

[quote author=“DawnTreader”]Patience… I still see Dell falling to $17 per share. The SEC investigation is continuing and sales continue to disappear. While server sales is showing strength, PC sales are plummeting in traditional markets. The big box retail strategy may meet with some success in terms of volume, margins will continue to be squeezed and there’s little IP to build a future compared to AAPL and HPQ.

It’s a matter of time before HPQ takes the US sales crown and a resurgent Apple is making big gains in the education space.

Does anyone see value that justifies a market cap of over $50 billion?

My puts expired in may

Anyhow—you are right and dell will go down some day, for various reasons…

DELL reports later today. Given the market’s typical irrational view of this company, I expect that the market would receive anything they said with a nice bump.

I can imagine the headline: Michael Dell attributes success to eating babies—DELL up 15%!

Of course, he doesn’t eat babies, but it doesn’t seem to matter how bad the news, DELL always seems to get away with it.

[quote author=“wheeles”]DELL reports later today. Given the market’s typical irrational view of this company, I expect that the market would receive anything they said with a nice bump.

I can imagine the headline: Michael Dell attributes success to eating babies—DELL up 15%!

Of course, he doesn’t eat babies, but it doesn’t seem to matter how bad the news, DELL always seems to get away with it.

So funny, so true…so pathetic. 

And how do you know he doesn’t eat babies? CEOs are a breed unto themselves.

[quote author=“willrob”]And how do you know he doesn’t eat babies? CEOs are a breed unto themselves.

I was just covering myself from a legal perspective.

Couldn’t help myself - just had to place a small short on Dell before the close despite all and sundry saying Dell will “beat” estimates. There are rumours that their difficulty in shipping laptops is due to failure to meet supplier commitments in recent quarters, ending the “supply Dell first” supplier tradition that Dell previously relied on. Question is, will Dell fudge this quarter’s “provisional” figure down to help the first signed-for figure next quarter, or up to preserve the status quo as long as possible? My feeling is sales will be down, but margins may be enough to hold up EPS.

preliminary Rev $14.8M; EPS 32c (non GAAP?)