Dell to restate earnings; executives "cooked the books"

Dell today announced it had completed an internal investigation into its accounting procedures, the results of which showed unnamed "senior executives" used improper accounting tricks to meet quarterly performance targets. Because of the investigation Dell will be restating earnings for the years 2003 - 2006, and the first quarter of fiscal 2007.

Dell said its net income for the restatement period will be reduced by between $50 million and $150 million, or 2 cents to 7 cents per share.

According to a company press release, the investigation found that "certain adjustments appear to have been motivated by the objective of attaining financial targets," and usually took place at the end of a fiscal quarter. Account balances were "reviewed, sometime at the request or with the knowledge of senior executives."

Although no names were given, Vice Chairman and CFO Don Carty, who replaced former CFO James M. Schneider in December, said "the ones that knew about it are the ones that are gone."

"We are committed to achieving and maintaining a strong control environment, high ethical standards and financial reporting integrity," said Chairman and Chief Executive Michael Dell. You may recall that Dell replaced Kevin Rollins as CEO earlier this year.

Dell shares fell 37 cents, or 1.4%, to $25.93 but jumped more than 2% to $26.45 after the announcement.

The full text of the press release is available here.