Dell, the PC giant, has postponed the release of its third-quarter financial report, scheduled for Thursday, citing the “complexity” of an ongoing investigation of the company by the U.S. Securities and Exchange Commission (SEC).
Dell said Wednesday it will release a preliminary report of third-quarter results by the end of November and that subsequent earnings reports will be delayed by approximately one week each from their current schedule. It also said the third-quarter report would be made public only as a press release, without the customary conference call on which analysts who follow Dell can ask questions of company executives.
The company also announced that the SEC “has entered a formal order of investigation” into Dell’s practices, although it emphasized that the delay in the earnings report is unrelated to that news. In a formal investigation, the SEC has the authority to subpoena documents and compel witness testimony.
The SEC and the company’s audit committee have been looking into certain accounting and financial reporting matters at Dell, which has not yet filed its second-quarter 2006 financial report.
Dell began an internal financial audit in August 2005 after learning that the SEC had begun an informal investigation of the company’s revenue recognition and accounting practices for past fiscal years. Dell’s internal audit revealed that the company may have misstated prior financial reports, including accruals, reserves and other balance sheet items.
Since then, Dell learned of a second investigation by the U.S. attorney for the Southern District of New York, who subpoenaed the company’s financial reporting documents going back to 2002.
-Robert Mullins, IDG News Service (San Francisco Bureau)
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