Dell SEC Woes Escalate
By: David Utter
News of serious problems has broken out of Dell's Round Rock headquarters, as the company disclosed it would delay its 10-Q filing with the SEC.
Along with that delay came the cancellation of a stock repurchasing program and a scheduled meeting with financial analysts. The disclosure followed Dell's determination that it would be unable to file a required 10-Q quarterly report with the Securities and Exchange Commission:
The investigations have indicated the possibility of misstatements in prior period financial reports, including issues relating to accruals, reserves and other balance sheet items that may affect the companys previously reported financial results.
The company is working with the Audit Committee and with the companys independent auditors to determine if any restatements of prior period 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 reviewing the matter. "We are continuing to investigate the matter fully," Carty added.
Michael J. Garcia's US Attorney's office for the Southern District of New York has also taken an interest in Dell. His office has subpoenaed documents related to the companys financial reporting from 2002 to the present.
Shares of Dell dropped today on the news of the broader impact of the SEC investigation, but have rebounded in trading to 21.66 as of press time. The investigation has been taking place since August 2005, but only became publicly known after Dell reported its second quarter financials last month.
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