DELL, the world’s largest maker of personal computers, said that it would be forced to delay its second-quarter figures because of “questions raised” after an informal US Securities and Exchange Commission investigation into accounting issues.
As well as delaying its second-quarter results, an event that could lead to Dell being delisted from the Nasdaq stock market, the company was forced to suspend its share buyback programme, a move that risks further alienating shareholders, a number of whom have reduced their holdings aggressively in recent months.
The company also postponed a meeting with financial analysts planned for this week, the second time that it has done so this year.
The news came as Lenovo, Dell’s Chinese rival, said that it would cut prices in its domestic market, raising the pressure on Kevin B. Rollins, the Dell chief executive, who is under fire after several dismal earnings reports, increased competition and the recall weeks ago of more than four million faulty batteries supplied with Dell laptops.
Bill Shope, an analyst for JPMorgan, said: “Today’s announcements contribute to an increasingly murky story . . . the second postponement to the company’s analyst meeting creates further uncertainty surrounding how Dell plans to correct its current woes.”
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The SEC’s year-long informal investigation has suggested that Dell may have mis-stated prior financial reports, including issues relating to accruals, reserves and other balance sheet items, the company said in a statement. These could affect previously reported financial results, although it added that it does not know by how much.
The SEC investigation was launched in August last year, but Dell admitted the inquiry only this year, saying that it was under no obligation to make it public. The company has also received a subpoena from the US Attorney for the Southern District of New York, who requested documents related to the company’s financial reporting dating back four years.
Shares in the troubled computer maker fell 2.12 per cent to $21.19 at the close in New York.
The shares have lost nearly a third of their value this year after Dell gave warning that its second-quarter profits would fall short of expectations amid falling prices and intensifying pressure on profit margins with increasing competition from manufacturers in the Far East.
Michael Dell, the company’s founder and chairman, 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, and we will take any appropriate remedial or corrective actions to address any problems.”