Dell Faces Investor Lawsuit Over Kickbacks

By Geoff Duncan February 5, 2007

An investor lawsuit filed last week against computer maker Dell by the Lerach Coughlin law firm in Austin, Texas, alleges the company accepted and then tried to cover up up to $1 billion in “secret and likely illegal” payments from shipmaker Intel. According to the complaint (PDF), the “exception to corporate average pricing” (e-CAP) payments had a material impact on Dell’s reported profits to the tune of around $250 million per quarter; in exchange, Dell exclusively utilized Intel processors in its products.

Intel has denied the allegations, claiming they’re just a rehash of similar charges made by rival chip-maker AMD in 2005. Dell has yet to comment. According to the complaint, Intel insisted on only a small handful of upper managers at Dell be aware of the arrangement in order to avoid antitrust scrutiny. Intel characterizes the payments as “rebates,” while the complaint repeatedly characterizes as “kickbacks.” The complaint names a total of 16 defendants, including current anf former CEOs Michael Dell and Kevin Rollins, and well as PriceWaterhouseCoopers, the company’s accounting firm.

It’s been widely known in the computing industry that Intel pays marketing fees to its partners for the display of the Intel logo on computers, as well as its use in advertising and other media promoting the products. Although such payments are not necessarily illegal, Dell does not separate such “reimbursements” in its financial statements; many financial analysts maintain that, if legal, such payments should be fully disclosed by all parties.

Dell accounting practices are currently under investigation by the U.S. Securities and Exchange Commission and the U.S. Justice Department. The lawsuit falls just as Michael Dell re-takes the company’s CEO position in an effort to fight off a serious challenge from Hewlett-Packard for the title of top computer maker.

Editors' Recommendations

Former Digital Trends Contributor

Geoff Duncan writes, programs, edits, plays music, and delights in making software misbehave. He's probably the only member…

Deals

This Dell laptop is over $900 off right now – no kidding!

Dell Vostro 7500 on White Background

Yes, you read that correctly: Right now you can save over $900 on a Dell laptop! There are some fantastic Dell laptop deals, laptop deals, and desktop monitor deals happening right now, and at Dell, you can score the 15.6-inch Vostro 7500 Laptop for only $959. That’s an amazing $968 off
its regular price of $1,927. Act now, because this is not a deal that will be around for long.

Dell is one the best laptop brands for good reason: Its top-of-the-line Vostro 7500 Laptop is a prime example of lightning-fast connectivity, premium display, fast processing times, and more. This is a laptop for someone who really appreciates good value, especially when it’s more than half off. Whether you need a workhorse laptop for school, work, or just everyday computing, the Dell Vostro 7500 is a solid bet.

Computing

MacBook owners make progress with lawsuit over faulty keyboards

MacBook Butterfly Keyboard

A judge overseeing a lawsuit regarding Apple’s failure-prone “butterfly” keyboard has given affected customers a boost after granting the case class action status.

Originally filed in May 2018, the case had been stuck in the courts as Apple attempted to get it dismissed. But the decision this month by U.S. District Judge Edward Davila in San Jose, California, puts the suit back in the spotlight.

Computing

This deal on the Dell Vostro 14 laptop is so crazy we didn’t believe it – save over $675

dell vostro 14 deal january 2021 dellvostro142

There are plenty of great Dell laptop deals out there but we're not convinced there's one better than this. Right now, you can buy the latest Dell Vostro 14 laptop for just $750. That's a huge saving of over $675, making it not far from 50% off the usual price. For the money, you get a fantastic laptop while enjoying the benefit of saving plenty of cash at the same time. We reckon you'll need to be quick though. While Dell sales are almost always great, they're also typically strictly limited, too.

The latest Dell Vostro 14 didn't quite make the cut in our recent look at the best Dell laptops but that's because there are so many great Dell models and not at all a slight against the Dell Vostro 14. On paper, it offers fantastic specifications for the price. You get an 11th-generation Intel Core i7 processor, 8GB of memory, 256GB of SSD storage, plus a 14-inch full HD anti-glare screen. That's pretty much all you need from a lightweight business-focused laptop to ensure your work can be done speedily and efficiently.