Dell Settles With the SEC For $100M 239
Sri.Theo writes in with news of Dell's humbling settlement with the US Securities and Exchange Commission. The core of the complaint is that Dell took secret payments from Intel to keep AMD's chips out of Dell's machines. The SEC calls it "accounting irregularities" — Dell was dipping into this secret slush fund to bolster its results, quarter by quarter. At one point the payments from Intel made up 76% of Dell's quarterly operating income. "For years, Dell's seemingly magical power to squeeze efficiencies out of its supply chain and drive down costs made it a darling of the financial markets. Now it appears that the magic was at least partly the result of a huge financial illusion. ... According to the commission, Dell would have missed analysts' earnings expectations in every quarter between 2002 and 2006 were it not for accounting shenanigans. ... (Intel is expected to settle a long-running anti-trust case that has highlighted these payments in the next couple of weeks.) ... Michael Dell... and Kevin Rollins, a former boss of the company, agreed to each pay a $4m penalty without admitting or denying the SEC's allegations."
Dude! (Score:5, Funny)
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You can't believe the damage these punks did to the company
You have one really weird idea of "damage". Michael Dell founded the business and is now worth $13.5 Billion. He built Dell computers into a business worth $33 Billion in assets with revenue of $59 Billion. If this is is damage you can damage my business any time.
The truth is that you do not succeed in business by playing nice and being a good boy. You succeed by shafting people. There is the odd exception, but broadly speaking successful businesses are launched by people willing to do anything it takes to
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The fact is Dell marked the transition of PC OEMs from a corporation which actually manufactured motherboards and other components, into someone which simply rebadges boxes made somewhere in China by a Taiwanese company. Digital went bankrupt and was bought by Compaq. Compaq was absorbed into HP. IBM sold its PC business to a Chinese company. Gateway went bankrupt and was bought by a Taiwanese company. HP traveled through rough waters and tethered on the brink of collapse. All because of Intel's "special r
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No, if you or I stole that kind of money, we'd get a cell. (And yes, he stole it; Dell is a public corporation, ergo its cash reserves belong to the shareholders, not the CEO.) Michael Dell gets a "fine" which will hurt him about as much as losing a $5 bill would hurt the average Joe. "It's good to be the king!"
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No they paid a bribe to the government so they would not go to jail. It's not 'humbling' it shows how weak and ineffective the SEC really is. The top echelon of both companies should be in jail and each company broken up and sold off.
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There. Fixed that for you.
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The right thing to do would be to expropriate all these companies and make them transparently run non-profit organizations, democratically administered by their workforce, supplying technology to us all for cost + labour.
Companies that engage in this sort of fraud should not be permitted to ever be run for profit again. The necessity of their existence should be something they are required to justify to the citizenry regularly, and when they are no longer able to do so, they should be dissolved.
Those who p
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Balance, my young Jedi knight.
I hate the fact that corporations will throw Grandma, Cousin Susie, and her baby kitty under the bus for profit. All the same, corporations serve society. Without greedy, profit driven investors and company officers, where would we be today? I don't exactly like where we are right now, but it's better than living like feudal Europe, IMHO
In short, lighten up a little bit. Instead of public executions, let's just put all those bastards into Chinese sweat shops, working for te
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It's wrong to put those people to work. It leads to a situation where we can outlaw more and more things as a way to get out of taking responsibility for ourselves, and it leads to a situation where we are reliant on a steady supply of criminals to keep things operating smoothly.
If we could ostracize them, that would be better than execution. But there is no place both within our reach and beyond our borders, so there is no where to ostracize them to. No, public execution is the right way to deal with th
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The trouble here, is that if you did that to one misbehaving company, losing the requirement to make a profit would effectively kill any competitors in the market.
But i do agree punishments for corporations need to be far more severe, at the moment the people at the top of these corps know they can get away with virtually anything and receive little more than a slap on the wrist. There needs to be a real danger of losing everything and being thrown in jail for these people, only then will they consider the
Re:Dude! (Score:5, Insightful)
Uhhhh - troll is trolling, but there is something of a serious question in the troll.
There really IS a big difference in the two statements. There is really no way to measure the damage caused by Dell's actions. If there is a way to measure the damages to AMD as well as the public, it would be a long, involved process that no one wants to invest the time and resources in.
However, it's pretty easy to analyze how much of Dell's profits resulted from this dishonesty.
Personally, I think the fine should be ALL of the ill-gotten profits. If they benefit by ten million, take that ten million, plus a punitive fine. If they profit by 100 million, take that 100 million, plus a punitive fine.
Sorry for feeding the troll, but I thought some reasonable people might need the distinction drawn for them.
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Actually - I'm a bit wrong in my own post.
IF this were a civil suit by AMD, claiming that they were damaged by Intel and Dell, and they wanted to recover damages caused by these irregular accounting practices, THEN the time and resources would be invested to determine how much damage had been caused.
In which case, AMD would probably recover those damages, plus a punitive award.
DISCLAIMER: I AM NOT A FRIGGING LAWYER!!!!
All the same, I'd love to hear about AMD filing suit against Dell and Intel.
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"(I personally put my money where my mouth is and pretty much build and sell AMD exclusively now)"
Ditto. I've never bought a new intel chip. Back in the day, I bought some used computers that were intel, starting with a 386. I replaced a couple of Intel chips with some off-brand (Green something ring any bells? I really can't remember the brand name now) that ran some faster. EVERYTHING that I've ever bought or built new was AMD. These days, I'm rather picky, and use Opteron chips exclusively.
Bang for
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I sort of missed that, but the other three cores still had full functionality, right? They had one core that failed, so they "locked" it out?
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Personally, I think the fine should be ALL of the ill-gotten profits. If they benefit by ten million, take that ten million, plus a punitive fine. If they profit by 100 million, take that 100 million, plus a punitive fine.
For that to be fair you can't just take the money from the companies bank accounts now. The current owners of the company are not entirely the same people as those who owned it when the fraud was perpetrated. Countless investors have bought and sold over the years and the investors who
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You shouldn't pay a fine, but your shares should lose value. Doesn't matter who owned them then, when you bought them you bet on Dell making you money. Sorry if that didn't turn out.
What you're suggesting is tantamount to corporate immunity from prosecution, for pretty much anything, so long as a couple of years have passed.
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For that to be fair you can't just take the money from the companies bank accounts now. The current owners of the company are not entirely the same people as those who owned it when the fraud was perpetrated. Countless investors have bought and sold over the years and the investors who own the company today may not have benefitted from the fraud at all. If I bought dell shares two weeks ago why should I pay a fine while investors who profited and sold years ago are laughing to the bank?
The whole matter is an SEC investigation, so it is all about misleading investors. It's not about Dell receiving money from Intel, it is about Dell receiving money from Intel and then telling the public they were making lots of money by buying their computer parts so cheaply; they should have told investors that they received money (illegally) from Intel, in which case investors would have known to keep their hands off DELL shares.
If you own DELL shares now, that is just tough. You bought a part of the c
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Well, they effectively were buying parts cheaply... Intel was effectively giving them a rebate on parts they bought from them.
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they should have told investors that they received money (illegally) from Intel
That would be amazingly dumb. They could have, you know, just not done anything illegal.
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I won't argue law - but I'll argue morality. Intel has been in the news often, being accused of various unfair business practices. People who own Intel stock now have had all the same opportunity to see that news as I have. They SHOULD HAVE been paying attention. They SHOULD HAVE thought something like, "You know, where there's smoke, there is probably a fire. I don't know how honest Intel is, and I don't want to be burnt when I find that they are dishonest."
If I invest in a munitions manufacturer, and
AMD duped me, too (Score:3, Interesting)
Yes, but AMD isn't clean either.
I've often been called a "troll" here for stating this simple fact, but AMD invented a certain "megahertz myth" [wikipedia.org] that's a half truth and for a time invested massively in marketing based on that.
I once bought a notebook with an AMD CPU labeled "2200+", which was meant to imply it was faster than an Intel Pentium 4 with a 2200 MHz clock. That could be, for that specific benchmark AMD created, but
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Hmmm. I guess that some people might find the 2200+ numbering to be misleading. In my own experience, those numbers have seemed to be nearly right. I don't see it as fraudulent.
I'm sure you remember the days when the first Athlons came out. The wife bought one, that ran at 1 ghz, I think she had 128 MB of memory, could have been 256, but I think it was 128. That machine ran like a dog. The machine I was using at the time had an AMD 450 mhz overclocked to 500 - K6-III mobile chip. I could run circles
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The problem with speed perception is that many of the things we do with computers could just as well be done with paper and pencil. CPU speed has always been enough for those tasks, if it's not wasted by bloatware.
I remember when the Pentium 4 came out, most articles about it mentioned that it would be useful mostly for people doing specialized tasks, such as video encoding, for all other users the Pentium III was good enough. What AMD did was to run jobs that didn't have any need for a Pentium 4 and claim
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Athlon XP had SSE. Earlier Athlons had AMD's version of vector processing named 3DNow! which was released before Intel even had SSE.
Athlon was faster than Pentium 4 at legacy X87 floating point support (which most programs actually used then). AMD couldn't use SSE at the time because it was patented by Intel and they were involved in one of their usual patent disputes. AMD and Intel signed a new patent cross licensing deal in 2001, years after Athlon was originally released.
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There have been rumours about Intel, MS, etc paying people to encourage exclusivity for years, and while I find the rumours believable, it's better to actually see evidence first. Sometimes rumours are complete lies started by malicious parties.
I don't own Intel stock, nor have I ever bough an Intel processor for any of my PCs - though I was considering one for my next machine now that Intel have upped their game. What's the point in encouraging competition if you don't take advantage of the benefits every
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I don't own Intel stock, nor have I ever bough an Intel processor for any of my PCs - though I was considering one for my next machine now that Intel have upped their game. [...] After this little piece of news though, I'm definitely going to stick with AMD on my personal machines for the next few years
I feel the same way. After experiencing AMD's willingness to completely abandon an entire CPU and chipset - AMD Athlon L110 with no proper Linux power man agement, and the R690 chipset, which doesn't even have stable Windows 7 drivers, I was planning to go with intel for my next machine. But this is a reminder of why I must not buy intel even when they are superior. Intel must be taught a lesson and we all must learn to teach it to them. Unless, of course, you enjoy having them manipulate the market in ways
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Why should you, as part owner of the company, be held liable for crimes committed by the company before you owned it?
Simple. BECAUSE YOU OWN THE FUCKING COMPANY.
You buy the company, you buy the liabilities.
Otherwise you're shifting the cost of the crimes of a company from those who own it to those who DON'T own it. How the fuck is that fair?
I agree with you 100%.
I just want to emphasize: companies don't commit crimes, people do. If "the company" knew of the crime being committed and didn't take action, yes, "the company" is liable and owners do need to be held responsible.
The perps themselves need to also pay (either a fine or jail time depending on the crime). Bernie Madoff and his ilk are great examples (I'm pleased that they sent his software developers to jail too. They were some of his biggest enablers). This may be where RajivSLK was
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If you buy a used car which you knew was stolen, then you are guilty of handling stolen goods and not only will you lose the car if the police find out, but you will also be punished for committing the crime.
The only problem is when people unwittingly bought a stolen car, the police will usually go easy on them in that case but they will still lose the car.
dell shop, looking to jump ship (Score:5, Interesting)
My company currently runs a dell shop, running a mix of vostros, optiplexs, and over $100,000 in Dell servers.
I have been having issue after issue with the power supplies in pretty much every dell I run. We really like to run the SFF style units and they use a specially sized power supply. Dell refuses to acknowledge that there is an issue even though I have a 25% failure rate in power supplies at the one year mark. They offered to give me a SWEET deal of $120 for a replacement power supply (on a $400 unit), down from the $150 list.
So Dell has screwed consumers over on systems with bad capacitors, screwed consumers over with bad power supplies, cheated their shareholders by falsifying earnings, and competed unfairly by accepting bribe money from intel. bad company, bad products.
Re:dell shop, looking to jump ship (Score:4, Interesting)
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That's the math of computers. Quality & Performance & Miniaturization & Aesthetic = Price. Enough people refuse to accept this and because there are vendors willing to take advantage of those people, many of them do so as not to lose market share and have their company killed by "Market Analysts" (Another group of people that seem incapable of doing the math of the
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My company currently runs a dell shop
New to dell shops. Nice to meet you.
over $100,000 in Dell servers.
I have been having issue after issue with the power supplies in pretty much every dell I run. We really like to run the SFF style units and they use a specially sized power supply. Dell refuses to acknowledge that there is an issue even though I have a 25% failure rate in power supplies at the one year mark.
I have to call BS here. Dell servers come with 3 year maintenance at a minimum and will replace the power supplies. Power supplies are a known failure point on machines, and on those that care they get redundant ones. Also, I've never heard of SFF servers.
I work with well over $2mil of Dell servers and more than that from other vendors. I prefer Dells.
Re:dell shop, looking to jump ship (Score:5, Interesting)
hundreds of workstations and a dozen servers, in nearly 50 different locations through the US.
Older machines seem fine, but the units purchased in the last 12-14 months have been dropping like flies.
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It really doesnt matter to me how or why or whatever, but Dell should see my issue and act instead of charging me a boatload to fix the machines.
If I take my error rate of ~25% and the discounted price of $120 for a PSU, as well as shipping of the defective machine back and forth $60, then I need to ad $90 to the price of each unit. That totally negates the price advantage of Dell over HP, Acer, IBM, etc.
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Indeed. I can understand (maybe past-tense) having an IBM shop. Or an Apple shop. Or, perhaps back in the day, a DEC shop, an SGI shop, or a Sun shop. Maybe even a Novell shop.
These are/were descriptive of unique ways of doing things.
But having a Dell shop? Feh. It's a fucking PC.
(Incidentally, at my day job we almost always buy Dell machines. Some of which are SFF. We experienced a couple of power supply issues on some Dimension 4600-ish P4 boxes that were already a few years old, but things have b
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Try putting in an IBM blade into a DELL chasis. Or get the IBM technician to configure your blade center to play nice with the DELL SAN.
If you want support you are all in on the hardware side...
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Most of the people I know who are "Dell Shops" do it because they get a service contract with Dell.
Whether or not that's a good way to do things is irregardless. The point is that Dell knows how to sell PCs to PHBs (who really don't care if you can get the same thing $200 cheaper elsewhere - $200 is background noise in the TCO).
Re:Hello, I'm a PC (Score:4, Interesting)
Whether or not that's a good way to do things is irregardless.
You mean irrelevant. Irregardless is not a real word. Even if you want to argue that it is a real word, it does not mean the same as irrelevant.
Getting back on topic, Dell does some things right. The most important thing for me is support. People often ask me for advice on what computer that they should buy. I always say Dell, because if something goes wrong then you can go back to them for help.
This is especially important, because if something does go wrong, I don't want them coming to me to fix it. Just because I gave them advice on what to buy doesn't make it my responsibility. Since I have started suggesting Dell (and explaining why) I haven't had a single person ask me to fix things when they download the lasted virus or when they want to install some new bit of hardware. For me, that is priceless.
But no, I wouldn't ever buy a Dell for myself.
"Don't admit fault"? (Score:3)
I get the reason why they did it, so they are not "criminaly negigent" but seriously? 4 years of having to restate all their earnings and eveything is cool?
I get why, eveyone made a killing off the stock price jumps, but still, somone isn't getting jail time for this.
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WTF (Score:2, Insightful)
They colluded and engaged in a conspiracy in violation of SEC laws and they get a fine?
A fine? This is beyond pathetic. The SEC may possibly be the worst organization on earth.
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After all, this is the same SEC that couldn't catch Madoff or Stanford, even though there were people begging them to check those two out. Regulation is only as good as the regulator enforcing it.
I think you miss the point. They were supposed to turn a blind eye to it. Otherwise you'd waste an opportunity to implement Thesis, Antithesis, Synthesis aka Problem, Reaction, Solution aka the Hegelian Dialectic. No one with any real power would have benefitted from preventing this. So they didn't act on any of the tips about Madoff or Stanford. From the point of view of the real "powers that be", these are good regulators, the very best that money can buy -- once someone buys them, or those who appoi
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Or if you believe it's the superior choice, you can worry about the material construction of my hat.
I love it when you give me choices! I'll guess that your hat is made of a paper/nylon blend, and looks something like this [swell.com]. And I must say, excellent choice. I like the brim.
Time to get to scammin' (Score:5, Insightful)
Only a $100M fine? Shows that crime _does_ pay time and again..
Just Dell? (Score:5, Interesting)
During that period, whenever I went shopping(either for personal use, or doing comparisons for employer bulk purchases) Dell always had very competitive prices; but not wildly different from comparable stuff from HP and friends. Either Dell's supply chain management absolutely sucked goats through capillary tubing, or some of their competitors must have had similar slush funds to work with.
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I remember Dell pwning everyone in prices during that time. Dell was by far the cheapest every time anyone asked me to buy them a computer. And, cheapest by far. The only choice used to be which type of Dell.
Maybe you didn't get those Dell coupons with $ and &s in them that would take 40% off. If you just went to dell.com or hp.com, they had similar prices but they had those coupons that would ta
Screw Settling...Nail These Swine (Score:2)
I'm sick and tired of seeing these ethics-free corporations buy their way out of trouble without actually admitting to wrong-doing. If they aren't willing to sign a public statement that says, "We broke the law, but we'll save everybody a lot of trouble and money by simply paying for our criminal acts", the state should prosecute them to the full extent of the law, and use the well-established cowardice of market traders to drive down the stock price with carefully-timed announcements, added charges and p
Re:Screw Settling...Nail These Swine (Score:5, Insightful)
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Even if they did vote, they did so based on lies and fabrications. GIGO, you know. The only thing you can blame them for is getting into the stock market in the first place. Once you're in, it's an elaborate g
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If the deal is: "we will give you a break on the price of our processors as long as you break the law by failing to publish proper accounts", then, yes, Dell should turn the deal down.
Oblig. (Score:5, Funny)
Frustration (Score:5, Insightful)
I'm really frustrated with settlements. They seem to circumvent several basic principles of justice:
I've heard arguments for settlements such as, "We're not sure we could get a conviction. This lets us get at least a modicum of justice" Well if you're not sure, then maybe you shouldn't be trying to prosecute? It's for a jury to decide what's a just punishment, not the prosecutor.
Or, "It lets us safe the legal expense of prosecuting." Well, if the system is so broken that cases can't be fought within the financial means of the government, then shouldn't it dawn on someone that it's way broken for individual citizens with limited financial resources?
America was founded with some beautiful ideals, but I don't have a lot of respect for those who have evolved its legal practices.
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54% (Score:2)
54% of the Senate is lawyers. The rules are not made to achieve justice, but to delay the case long enough to pad the bill.
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Just curious:
"It lets us safe the legal expense of prosecuting."
Is your use of "safe" some sort of typo, or an attempt at loosing the English language even further?
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So you bluster and you bargain. You puf
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They let the wealthy buy their way out of criminal convictions, whereas the poor cannot.
It's all good, the poor get out of it their own way. Like the homeless guy who lives near my house, who got caught for DUI (don't ask where he got the car) declined to pay the fine and took jailtime instead. It was all good, he got a free haircut. Free food. He didn't have to pay for anything. Plus they gave him some good medical treatment for a skin rash he had. So the poor have their own way of getting out of it (this other guy I know got a commercial-robbery case thrown out of court because all he
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Something like settlement extortion will exist for as long as it is cheaper to pay up than it is to defend yourself. Perhaps we should make the entire profession of lawyers illegal? (no sarcasm there)
How about reprecautions for one's actions?! (Score:5, Insightful)
"The company neither admitted nor denied guilt as part of the settlement--a common phraseology in such deals."
How about a big FUCK YOU to Securities and Exchange Commission and the US Department of Justice! How about you dig a little deeper, get the dirt on the direct involvement by Michael Dell and the other board members during the 4-year period and put these schmucks in San Quentin Federal Penitentiary. If you can't find the evidence, just use your powers of Extraordinary Rendition to send a few of these folks over to the Middle East or Africa, a little water boarding, pull of some fingernails and you could get just enough information to find hard evidence to try and convict these people.
I could name a dozen good computer companies who disappeared during this time frame due to Dell's stellar rise in the computer market though shenanigans like this. Good computer companies that produced better products when under because they didn't cook their books like Dell did and didn't take bribes from Intel.
Like another poster said, the pure computer companies that did survive like HP (previously Compaq), Acer, etc. might have been involved in this also.
Intel did just settle the record breaking $1.4 Billion USD to the European Union's commission for violating anti-trust regulations or having to pay $1.2 Billion USD to AMD previously in a similar settlement.
I'm still glad to see that the NY State case against Intel is still on-going and it would be great if other states and companies jump on this bandwagon for lynching Intel since these guys have been playing some dirty games for a long time. Time to hold Execute Officers directly responsible for criminal and immoral decisions directly liable for their actions and orders. Too bad that our government is in the pocket of big corporations and that no real sanctions will be taken against these business scumbags.
Dell's success is now forever clouded by this and I think that looking at their shady little deal with Intel, I wouldn't put it past them if there was one going on right now with Microsoft for operating systems. Dell just did pull Ubuntu Linux OSes computers from their web site just as Linux is getting more acceptance by people due to Google's Android mobile OS success in the mobile market and also the upcoming tablet computer revolution. Microsoft isn't playing in this field and they are scared since they cannot compete.
AMD: seek RIAA-like punitive damages from Dell (Score:3, Interesting)
I always find it amazing how..... (Score:2)
....such matters benefit the SEC but the end consumers who were hurt by it never see anything returned to them in compensation, though stock holders might.
In Soviet Russia... (Score:2)
Show of hands (Score:2, Interesting)
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Not logical. (Score:2)
Intel allegedly pays Dell not to use AMD chips?
Intel's payments allegedly make up 75% of Dell's quarterly operating income?
This doesn't add up. That would mean that Intel was not making any profit from one of their biggest customer, but would even be LOSING money by doing it?
Right. That kind of deal would be AMD's dream.
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"Intel's payments allegedly make up 75% of Dell's quarterly operating income? " - during SOME quarters, not all of them. Also suppressing competition can be worth sacrificing theoretical profits. Even if you only make $1 per widget, if you're the only one selling widgets, you'll still make a killing.
Bonuses (Score:2)
I would love to know how much upper level management & the CEO were making, including bonuses, during this period.
Intel (Score:2)
Why isn't anybody commenting on the Intel side of this story? After all, they were the ones paying the bribes, or whatever you want to call that.
Having suffered from Intel's legal belligerence in the past, I know that they are pretty good at getting their will done. But, are not two parts required for this, er, illicit transaction to take place? What about the other? Doesn't Intel hold a position much more akin to a de facto monopoly in the PC and server markets than Dell? Isn't paying to keep the competit
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Please don't bring this up again - I've already been through a ton of flamewars defending AMDs position where I couldn't get the opponents to agree that, while Intel has no obligation to support AMD, deliberately ignoring AMDs optimizations is bad faith.
Here are links to previous Slashdot stories on the topic
http://yro.slashdot.org/story/09/12/16/1816245/US-FTC-Sues-Intel-For-Anti-Competitive-Practices?art_pos=1 [slashdot.org]
http://yro.slashdot.org/story/05/07/12/1320202/AMD-Alleges-Intel-Compilers-Create-Slower-AMD-Cod [slashdot.org]
Re:And yet the geeks/nerds/uninformed... (Score:5, Informative)
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Intel was not paying 'discounts'. It was taking an anti-competitive action.
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And let's not forget the actual amount of the discount; if you discount stuff low enough so that nobody can compete, and it just so happens that you're selling products below production price, the case could be made that you're doing something calle
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If you are the market leader, and discount your goods if you get an exclusivity deal, that's pretty anticompetitive don't you think?
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How do exclusivity deals with major vendors count as monopolistic? It just sounds like competition to me. I like AMD's competition to Intel, but just because Intel is the chip leader for PCs doesn't mean it should be hampered in trying to compete with its competition. Can you point me to an antitrust statute that says exclusive deals with manufacturers counts as anti-competitive behavior?
Lets say Dell needs one million processors. AMD can only supply 500,000. Intel can supply a million. They make an offer for Dell to buy exclusively Intel chips, or they won't sell anything at all to Dell. Since Dell cannot live only buying 500,000 AMD chips, they have to buy the Intel chips. That means it doesn't matter whether AMDs chips are better value for money than Intel chips or not, Dell won't buy them. That's what makes it anticompetitive; Dells decision not to buy AMD is not based on AMD's competit
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Re:I don't understand. (Score:5, Interesting)
This seems like a Rube Goldbergian way of doing business.
You'll probably want to sit down for this.
Most of the business world based on lies, because most of the business world depends on marketing. And marketing, once you break it down, is manipulation. Why does your girlfriend want a common blood stained rock on her finger to symbolize fidelity? Why do some people spend two hundred dollars on a steak one night, instead of cooking one for themselves every night for a month? Why did everyone think that home prices should outpace inflation for eternity? Because businessmen are very good at lying to you, and conning you into buying things - ideas, products, services, status - that are worth far less than you think they are. That's where the money is.
When men thought capitalism could lead to liberty, the world was radically different. Manufacturing was just hiring enough people to hand-make everything that you could sell. There was no automation, no assembly lines. Laissez faire makes sense when it's hard to hide cheating. Plus, most of the population believed that charging interest was a mortal sin, because making money without working was immoral.
In today's world, people often have no idea of what they are buying. Bonds in financial markets are purposefully inscrutable. Required company filings are mangled beyond comprehension. As proof of this, just look at the subprime meltdown. One guy in California figured it out, and had to beg Goldman Sachs into creating the instrument that would allow him to short the housing market bonds. They had gotten so good at selling, and so bad at actually analyzing the market, that Wall St conned itself into trillions of dollars of debt. Luckily, "main street' - ie, the people who actually perform economic work - were there to bail them out. And Wall St, since a few of them had figured it out early, was busy selling the debt to public entities like schools, county governments, and retirement funds because they were easy marks.
And now, since a company's value is perceived to be the things Wall St says about it, you have a totally fucked up system, where companies are trying to seek the approval of these greedy, useless motherfuckers, who wouldn't know a day's work if it hit them in the mouth with a sledgehammer. We have an entire industry - the financial system - that doesn't perform any useful work. It's like a cancer on the economy, but one that's very successful in centralizing wealth into their own corner. We could replace all of the banks, insurance agents, and ratings agents with totally transparent branches of government, and get on with the business of really innovating - new technology to improve the world, not just figments of financial imagination, repacked and resold to sucker after sucker. But for some reason the American people think that would be the end of the world. Socialism! Communism! The loss of liberty and freedom and democracy!
I wonder who gave them that idea.
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Here's why some of us still believe in a free market (though not completely Laissez Faire):
What makes you think the goverment will be any less corrupt than the corporations you rail against? What makes you think greedy people won't still game the system from within the government? What makes you think the governmnent beauracracy will be competent/good at the job?
In a market, you at least have the possibility of multiple different corporations competing against each other - so if you don't want to do busines
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Marketing can give you some boost but it basically can only amplify what is fundamentally true and good about a product.
That only works if the customer can see what's good and true about a product. The financial companies do their best to make that impossible. Many retail goods companies do it too, eg. Apple censoring their own forums whenever they have a problem with a product.
The truth usually only appears after major meltdowns.
Small companies aren't immune either, some of the most bare-faced lies I've ever been told were by small companies (who actually had practice meetings to see who can lie the best when the lie is an
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PS: That 'perfect steak' was probably dropped on the floor at some point...and in the small restaurant business the hygiene rules are for losers.
Intangibles like the environment (Score:3)
Is this like sweeping dirt under the rug, or offshoring steel mills to China & Pakistan where almost-smart Americans no longer have to see the visible pollution that goes into manufactured products we use every day. As long as it's not happening in our backyard or where we can see it, it's good for the environment.
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To a large extent, you get what you pay for (Score:2)
My baseline suggestions would be:
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