Dell says SEC probe now formal, delays results

Computer maker says will deliver quarterly results by the end of the month, but notes delay not linked to change in investigation.


NEW YORK (CNNMoney.com) -- Dell Inc. late Wednesday clarified that the company's decision to delay its earnings report was due to to issues it's facing in preparing the results and not linked to an ongoing Securities and Exchange Commission probe into the computer maker's accounting.

Dell (Charts) said it would delay releasing its third-quarter results until later this month. The company was initially expected to report its numbers on Thursday.

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Dell said the delay was not related to the SEC's decision to elevate its investigation to formal from informal status. Instead, Dell said the postponement reflects "the level of complexity the company is facing in the preparation of its preliminary results," related to the SEC investigation and its own inquiry into accounting and financial reporting matters.

Dell (Charts) shares fell over 3 percent in after-hours trade on the news, after closing slightly higher in regular Nasdaq trading Wednesday.

The company plans to announce preliminary fiscal third-quarter results in a news release "by the end of this month," but will not hold a conference call for analysts as it has in the past.

Analysts expected Dell's earnings per share to sink 38 percent from the year-ago period to 24 cents a share. Revenue was expected to edge higher by 4 percent to $14.4 billion.

Additionally, it said future earnings announcements will be pushed back by approximately one week versus the company's original earnings schedule

"The implication is that this (SEC) investigation is turning out to be more serious than what Dell anticipated and what the Street anticipated," analyst Shaw Wu of American Technology Research told Reuters. Wu has a "neutral" rating on Dell's shares.

The SEC had been conducting investigations into the company's accounting and financial reporting practices.

Dell was notified "recently" that the SEC had stepped up its investigation, which the agency had been conducting on an informal basis since August 2005, Dell spokesman Jess Blackburn told Reuters.

Round Rock, Texas-based Dell is also facing an inquiry by the U.S. Justice Department into its accounting. The U.S. Attorney's office for the Southern District of New York subpoenaed documents related to its financial reporting from 2002 to the present, Dell said in an SEC filing in September.

The SEC and Justice Department investigations indicated the "possibility of misstatements" in past financial reports, including "issues relating to accruals, reserves and other balance sheet items," that may affect previous results, Dell said in the September filing.

Dell said in August that while responding to the SEC's informal inquiries, it came across additional matters that required a separate review by its board's audit committee, according to Reuters.

The company later canceled a meeting with investors and analysts in New York and said it did not know whether the accounting reviews might have a material impact on its finances, Reuters reported. Dell in August had said it did not believe the accounting issues would have a material impact.

Dell said it hopes to regain compliance with SEC filing requirements "as soon as possible."

Rival Hewlett-Packard (Charts), which reclaimed the No. 1 spot in the worldwide PC market from Dell in the calendar third quarter this year, is scheduled to release its results Thursday. Last month, Apple Computer (Charts) reported a 27 percent increase in net income, partly due to strong sales of its Macintosh computers.

--from staff and wire reports


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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.