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This is a little weird. It's not 'padding' earnings, since Intel really did pay them the money, and they really did make it. What the SEC is saying is that they
by byrneseyeview 16y ago
This is a little weird. It's not 'padding' earnings, since Intel really did pay them the money, and they really did make it. What the SEC is saying is that they didn't tell investors that there was a risk, here. But the risk was "If we think using AMD is worth losing these payments, we'll do it."
That's not terrible. It's like saying "If we think our CEO is incompetent, we may hire someone else, even if we have to pay him more." Yes, that's a hidden risk to earnings.
- spinchange 16y agoNo way. This is accounting fraud, plain and simple. It was a massive cash kick-back from a supplier that was disguised as regular earnings or revenue to keep Wall St. expectations and Dell's stock price up. Who knows how much Dell and other managers in the know profited from this by cashing out stock or options for years while the rest of the investing public held the bag? They should probably be in jail.
- byrneseyeview 16y agoBut the point was that Intel was paying them, presumably in order to not do something that would harm Intel. So it makes sense to keep accepting that payment until the costs exceed the benefits. Are you contending that Dell would not have recouped any of that rebate money by working with AMD? If so, why would Intel pay so much? In theory, just paying Dell $1 would be enough.
- alain94040 16y agoIt's padding because if you read closely, toward the end of the article, Dell was clearly fine-tuning the rebate amount at the end of each quarter so it would match whatever target they had. Intel played along and knew why Dell was asking for specific rebate amounts.
- byrneseyeview 16y agoThen the dollar amount is completely wrong. It's not a multi-billion dollar fraud unless that's the amount by which they beat their estimates.