…someone call in a repair on their computer. The difference between, say, $50 and $100 isn't much for one computer, but when multiplied by one million warranties, it adds up quickly.
The problem with reserve accounts is that they're quite easily manipulated because there's no absolute rule on how much money to set aside, said Tracy Coenen, founder of forensic accountant firm Sequence.
"You can play games with it. It's one of those grey areas in accounting," she said.
Fixing the problem
To make sure this doesn't happen again, Dell says it is reorganising its finance department. Accounting and financial reporting duties will be kept separate from the people responsible for planning and forecasting future quarters. The position of chief accounting officer has also been "strengthened" and will be responsible for all accounting and financial reporting responsibilities for the entire company.
But even news of numbers being manipulated may not hurt Dell all that much in the financial community. Some investors just seem relieved that the company could move on from the investigation, which has prevented Dell from filing any official earnings reports or giving any guidance about the state of its business for the last year.
"The cumulative impact is not that meaningful, but I think that the main takeaway is that they're now ready to put this behind them," said Bracelin of Pacific Crest. "They're now in a position to fix some of the deficiencies they found and, from an analyst perspective, or an investor's perspective, people don't invest in companies based on what they did. People invest based on what they will do."
Competition
How messy is your server room?
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Dell executives continue to co-operate with the US government's probe, Carty said. But the biggest concern for Dell, which is dealing with shrinking market share, exploding laptop batteries and an increasing perception that its products are decidedly bland (despite a new effort to sell laptops in snazzy, new colours), is how this will play out with customers.
"You don't want any questions," said Samir Bhavnani, an analyst with Current Analysis West. "They've been doing a bunch of things good to get back on their feet a bit and this is a pretty big speed bump. Hopefully they're able to get over it."
