Dell Computer Investigation
Dell, the computer manufacture, has one more roadblock in their corporate highway. The SEC is investigating them for accounting fraud and problems relating to accounting. This just adds more problems to dell and its stockholders.
Dell has been having a big problem with their stock in recent years as it continues to go lower and lower in price. Their stock has currently fallen around 24% just this year. All the SEC Dell computer investigation can initiate is even more trouble for investors in this computer company.
One of the recent problems with the Dell computer investigation was their laptop batteries. These batteries, made by Sony, had been catching fire. Dell ended up having to recall over 4 million laptop batteries because of this.
The lithium-ion batteries have always had a history of being able to catch fire but never has there been such a big recall. It is reported that these battery defects were caused by a Sony manufacturing problem.
Dell profits are down 50% from their earnings just a few years ago. This is continuing to drop at a fast rate as investors move toward Hewlett Packard for computer tech investing. This has made HP report a very good stock rate as it rose over 14%. Executive Officer Kevin Rollins said that he cut prices "aggressively" in the quarter. This has resulted in one of the slowest sales rates Dell has had in four years.
As Dell falters they are helping their competition in other ways too. Sales are going up on PCs made by HP, Gateway, and Apple. They have more than a 15% increase in shipments and are expected to continue to rise as their products get better and their competition gets worse.
The Dell computer investigation has reported that that the SEC first requested accounting information in August of 2005.
The information was relating to accounting and revenue for Dell for the past few years. To go along with the SEC Dell has started their own Dell computer investigation and has found some issues that they report aren't likely to have an impact on their finances.
The Dell computer investigation also reports that the letter from the SEC after Dell computer investigation is not reporting anything unlawful but is rather an informal letter. They send out hundreds of them and they are not saying that Dell has been doing anything specific that illegal.
The Dell computer investigation is going to have to change the way they are run to come out of this one. They need to work on their customer communication skills and honesty with their investors.
Dell also needs to apparently do more testing on their products before they release them so they won't have another incident like the battery recall. One of the big questions is, "Could Dell survive another incident like that or can they even survive the SEC investigation?" Most agree that they will survive even if it greatly hurts their reputation. They are still thought of as good, cheap computers by most people.
It is expected that dell stock prices will continue to fall as they lose face to the public view. For most of the public Dell was viewed as a safe investment because it was so big it would never have problems. This proves that even the biggest companies are not invincible and can still have their own roadblocks.
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