Michael Dell has not even had the time to put the CEO title on his business cards and he is greeted with a shareholder suit that alleged funny accounting between Dell (DELL) and its major chip supplier Intel (INTC). The documents filed in District Court claim that there were $1 billion in kickbacks and payments. It would seem that a figure of that size would be hard to hide, so the investors sued Dell accountants PricewaterhouseCopper a well.
Dell is looking into accounting irregularities with its audit committee and accounting firm and the SEC is looking over its shoulders. Dell has not been able to file final financial statements for two quarters due to the problems.
The suit further alleges that these payments were made to keep Dell from doing business with Intel competitor AMD (AMD).
Now, AMD’s chips were not considered as good as Intel’s for a number of years. As their chips improved, they picked up considerable share in both the server and PC markets and now have about a quarter of the world’s market. The argument that this should have happened overnight is a bit stretched.
The law firm of class-action specialist William Lerach is handling the suit. Not a ringing endorsement of its merits.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
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