WSJ: Dell investors sue, alleging illegal payments by Intel

by BBBL67 on 2007-02-02 09:19:14

SAN FRANCISCO (MarketWatch) -- An investor lawsuit seeking class-
action status accuses Dell Inc. of improper accounting in its
relationship with chip giant Intel Corp., according to a media report
published Thursday evening.
The suit, filed late Wednesday in U.S. District Court in Austin,
Texas, alleges that Dell failed to properly account for and disclose
quarterly rebates from Intel that inflated profits by hundreds of
millions of dollars, according to a story in The Wall Street Journal's
online edition. See Wall Street Journal story (subscription required).

The suit alleges that Dell received at times as much as $1 billion a
year in "secret and likely illegal" kickbacks in the form of "e-Cap"
or "exception to corporate average pricing" payments" from Intel to
ensure that Dell used no other chip supplier, according to The
Journal. Specifically, the complaint alleges that Dell received
payments from Intel for not doing business with American Micro Devices
Inc., The Journal reported.

The Journal said Dell declined to comment on the suit and that Intel,
which denied the allegations, said it would move quickly to defend
itself.

The suit was filed on the same day that Dell said Michael Dell, the
company's founder and chairman, would immediately reassume the
position of chief executive that he gave up in 2004. Kevin Rollins
resigned as CEO from the company and its board of directors. See full
story.

Both Michael Dell and Rollins are among 16 individuals named in the
suit, according to The Journal, which said Dell's accounting firm,
PricewaterhouseCoopers LLP, was also named as a defendant.

The story added that the suit seeks class-action status on behalf of
purchasers of Dell shares between February 2003 and September 2006.

Dell previously said its revenue-recognition practices are the subject
of SEC and internal investigations, and the U.S. Attorney's Office in
New York is investigating its financial reporting, The Journal said.
Dell stock closed Thursday at $23.80, down 1.73%.

Investors sue Dell on payments from Intel: WSJ - MarketWatch
http://www.marketwatch.com/news/story/investors-sue-dell-payments-intel/story.aspx?guid=%7B400315B0%2DE375%2D4920%2DB300%2D784220BEFE35%7D&dist=TQP_Mod_mktwN