SAN FRANCISCO - Computer maker Dell today reported a 51 per cent drop in profit and said securities regulators are conducting an informal investigation related to revenue recognition and other accounting matters.
Shares of the world's largest personal computer maker fell 4.8 per cent in after-hours trading. Dell said the US Securities and Exchange Commission told it in August 2005, that it was conducting an informal investigation of the company.
Dell said it does not believe the issues have had or will have any "material impact" on its financial position. It did not disclose the matter earlier because "we are under no obligation to disclose it," spokesman Jess Blackburn said.
Dell announced the SEC review as it reported a drop in net income for the three months ended August 4 to US$502 million, or 22 cents per share, from US$1.02 billion, or 41 cents per share, a year earlier. Revenue rose 5 per cent to US$14.1 billion, the slowest growth in at least three years, even though Dell cut prices to boost market share.
Analysts, on average, had forecast profit of 22 cents per share on revenue of US$14 billion. Dell, in a preliminary earnings announcement on July 21, said earnings would fall about 30 per cent short of forecasts because of "aggressive pricing" in a slowing commercial market.