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Dell Refiles SEC Statements

PC giant blames $92M reduction over 4 years on software, warranty revenue accounting

By Jim O'Neill,  Newser User

Posted Oct 31, 2007 10:23 AM CDT
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(Newser) – After a yearlong internal audit and SEC probe, Dell yesterday refiled financial statements that blamed methods of recording software and warranty sales on a $92 million profit reduction from 2003 to the first quarter of this year, the Wall Street Journal reports. The reduction was about 1% of the Texas-based company's $12 billion net income for the period.

Independent accounting firm Pricewaterhouse said Dell’s poor oversight resulted in “inappropriate accounting decisions" that inflated software and warranty revenue. Dell also recorded vendor funding as expense reductions instead of a reduction in cost of goods sold. Dell’s restated filing included a $105 million cut in software revenue for 2005. The company is cooperating with SEC and Justice Department investigations.

Michael Dell, chairman and chief executive officer of Dell Inc.
Michael Dell, chairman and chief executive officer of Dell Inc.   (Getty Images (by Event))
Employees walk past the Dell headquarters building, Wednesday, May 30, 2007, in Round Rock, Texas. Dell yesterday restated profits for 2003 through the first quarter of this year, resulting in a $92 million profit loss. (AP Photo/Matt Slocum)
Employees walk past the Dell headquarters building, Wednesday, May 30, 2007, in Round Rock, Texas. Dell yesterday restated profits for 2003 through the first quarter of this year, resulting in a $92 million...   (Associated Press)
Dell laptops are seen in North Andover, Mass. in this March 1, 2007 file photo. Dell reduced its profits by $92 million from 2003 through the first quarter of 2007, citing accounting problems. (AP Photo/Elise Amendola, file)
Dell laptops are seen in North Andover, Mass. in this March 1, 2007 file photo. Dell reduced its profits by $92 million from 2003 through the first quarter of 2007, citing accounting problems. (AP Photo/Elise...   (Associated Press)
Shoppers look at a Dell kiosk with several Dell computers on display in San Jose, Calif., Wednesday, Aug. 29, 2007. (AP Photo/Paul Sakuma)
Shoppers look at a Dell kiosk with several Dell computers on display in San Jose, Calif., Wednesday, Aug. 29, 2007. (AP Photo/Paul Sakuma)   (Associated Press)
The headquarters of computer giant Dell, Inc. is shown in this 2006 file photo in Round Rock, Texas. Dell said Thursday that an internal audit committee has found a number of accounting errors and evidence of misconduct in its monthslong review of previous earnings statements. (AP Photo/Harry Cabluck, FILE)
The headquarters of computer giant Dell, Inc. is shown in this 2006 file photo in Round Rock, Texas. Dell said Thursday that an internal audit committee has found a number of accounting errors and evidence...   (Associated Press)
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