1 November 2007
Dell has presented the Securities and Exchange Commission (SEC) with cleaned-up accounts for the years 2003-2006 and the first quarter in 2007. The restatements identify that Dell earned $92million less net income than it had previously recorded in earlier filings.
In August, the company said that it might have to write down up $50million-$150million to put right "accounting errors and irregularities". Unnamed senior executives were accused of allowing, or requesting, accounts to be altered to show that quarterly targets were met.
In the context of Dell's $12billion net income during the period, the write down is a drop in the ocean. But what does it say for the company culture at the time, allowing such manipulation to happen?
In August, Dell said it had sacked, retrained, reassigned or reprimanded those involved. It named no names.
In good news for shareholders, Dell today said it is to resume stock buybacks. In a strong research note yesterday, Goldman Sachs analysts predicted that the company would spend up to $8billion on the buyback, which should help its tax raise. The double whammy means that Dell needs to deliver less than seven percent revenue growth to get 20 percent earnings growth.
Goldman Sachs also reckons that Dell's new retail channel will add $500million-$1billion in revenue over the next year. Recently, Dell signed up Wal-Mart and Staples in the US; more retailers are on their way, Goldman Sachs says. Finally, the woeful DRAM market means that Dell's gross margins will be higher than previously anticipated.
Keep up to date with industry and Nomensa news by signing up to Nomensa newsletters.
