With its deluge of new machines and its price cuts on earlier ones, Dell Computer Corp seems successfully to have swept the concerns over its foreign exchange dealings off the main news pages, but just what was it all about? Seems that in August, Dell’s board discovered that as well as doing normal currency hedging transactions to protect the company from fluctuations, its treasury department had been speculating in currency options, entering into deals adding up to as much as $1,000m and that it was $38m down on the trades at the end of the second quarter; the board ordered management to unwind the positions at once, and not to speculate again, and thought that was the end of it until Kidder Peabody & Co analyst David Korus began to investigate; the issue is whether the tarding profits and losses were accounted for correctly in the company’s books – the rules say that gains and losses from normal hedging can be spread out over time, but that gains or losses on speculation have to be taken with the figures in the quarter in which they were incurred; Dell insists it accounted for all losses correctly, but the US Securities & Exchange Commission now wants to make sure – Dell asked the Commission to look into the issue, but in the circumstance it would have done so anyway.
