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Dark Days at Dell

Remember when Dell's most embarrassing problem was its recall of more than 4 million PC batteries because they might catch on fire? That disclosure in mid-August practically represents good old days compared to what has happened since.

While Dell's storage has held strong, the company has had a serious of embarrassing revelations. What started with the battery recall grew far more serious:

  • Accounting problems: Dell has not filed its earnings report for the quarter that ended in July, and last week delayed last quarter's report. Dell says it will announce preliminary results Tuesday without a conference call to discuss them. (See Dell Delays Earnings.)
  • Regulatory problems: The Securities and Exchange Commission (SEC) is formally investigating Dell's revenue recognition practices. Nasdaq notified Dell Sept. 15 that it is out of compliance and can face de-listing because it had not yet filed its most recent earnings.

    Dell has requested a hearing, and several Wall Street analysts say it would be shocking if a company of its size were de-listed, even with the latest delay. (See Dell Wants Hearing.) "It would have to have done something be real bad," one says, "but never say 'never.' "

    Another analyst says Dell may be saddled with an "E" after its ticker symbol the way Brocade was for five months in 2005 when it was late filing earnings, but a de-listing is unlikely. (See Nasdaq Drops Brocade's 'E' .)

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