Dell rings bell for time out

NEW YORK - Dell, the world's biggest computer-maker, has scrapped a meeting with Wall Street analysts after admitting it may have to rip up several years of financial results.

The company said it would also suspend purchases of its own shares, which have been helping to prop up its ailing stock price.

And it said the Department of Justice had joined an investigation into its accounting practices, demanding that Dell hand over documents dating to 2002.

The company is to delay the filing of its latest quarterly results because it can no longer be sure that previous years' figures are accurate - piling on further agony for investors who have been faced with a string of disasters.

Dell is already in the throes of the electronics industry's biggest-ever product recall, after more than four million of its laptop batteries were found to be prone to exploding into flames. Its most recent profits were down by a half because it has had to slash prices to keep customers buying product.

Tech-sector analysts were left furious by the last-minute cancellation of Dell's financial presentations, due to be held today in New York, as it was the second time they had been delayed - the earlier date was in April.

The Securities and Exchange Commission first asked Dell for information on its accounting policies more than a year ago but the company initially kept the investigation secret because it was "informal".

Chairman Michael Dell - who founded the company 22 years ago - admitted the inquiry last month but chief executive Kevin Rollins sought to play down its likely impact.

"The SEC's informal letter doesn't suggest any violation of the law," Rollins said at the time. "There are hundreds of those letters that go out. I don't believe it will have any impact on the historical financials of the company but we are going to have an independent audit just to make sure we are safe."

But the new involvement of the Department of Justice suggests the impact may be more serious than first thought.

Don Carty, the head of Dell's audit committee, said auditors had found "the possibility of mis-statements in prior-period financial reports, including issues relating to accruals, reserves and other balance sheet items that may affect the company's previously reported financial results. We have not yet reached any conclusion on materiality as to these issues".

Dell said: "We are fully co-operating with the investigations and working to resolve any and all issues raised in connection with those investigations as quickly as possible. We will take any appropriate remedial or corrective actions to address any problems."

Charlie Wolf, technology analyst at Needham & Co, said the "vague" nature of Dell's statements on the accounting investigation made it impossible to gauge its likely impact "but on a list of Dell's problems, this one is probably number 8".

Dell's market share growth has already stalled in the US as it gained a reputation for poor customer support and as rivals cut their prices.

- INDEPENDENT