Dell Profit Tumbles, Target of SEC Probe

Dell's quarterly profit plummeted 51 percent in the second quarter, and the company disclosed it was the target of a Securities and Exchange Commission investigation into the ways it is reporting its revenue.

The Round Rock, Texas based PC manufacturer said it would look to improve its financial situation, possibly explaining its broadened relationship with AMD, also announced Thursday.

The company's profit was still fairly healthy at $502 million or 22 cents a share, however this was far off the $1.02 billion or 41 cent per share profit recorded for the same period last year. Revenues increased a modest five percent to $14.09 billion from $13.43 billion.


"While we are disappointed with the results for the quarter, we are taking the necessary actions to correct missteps and improve our results for the long term," Dell CEO Kevin Rollins said in a statement. "Key actions include accelerating cost initiatives, increasing investments in service and support, and better pricing management."

Rollins indicated that the company's financial issues had a lot to do with a slowing PC market and price cuts that cut into overall profit margins. With most of the growth now on the consumer side of the market, Dell has struggled since a large portion of its business relies on enterprise sales.

Along with the disappointing numbers, Dell also disclosed it was the target of an investigation into how it reported revenues in past fiscal years. Dell indicated it was cooperating with the SEC, and said at this time the government did not say it was in violation of any laws. An internal investigation is underway.

The news was not all negative for Dell; the company also announced an expansion of its partnership with AMD. Dimension desktop computers with AMD processors will be available next month, with two-socket and multi-processor AMD Opteron Dell servers due by the end of the year

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