Dell lawsuit: what's ahead?

Earlier this year, I did an entry looking at Dell's accounting problems and how it had run into with the Securities and Exchange Commission.

At the time, I suggested that Dell's accounting headaches were just a small part of a much more troubling picture.

Now the problems continue with reports that New York Attorney General Andrew Cuomo has filed a lawsuit alleging, among other things, that Dell cheated on its customers by luring them in with zero percent financing, then switching them to a higher rate without their knowledge at the time of purchase. He's also accused Dell of selling onsite computer repair programs but failing to deliver.

"At Dell, customer service means no service at all. Dell's consumers were intentionally misled, and they had to pay for that privilege. I hope this lawsuit sends a message to companies large and small that delivering a product is simply not enough - the promises they make must be delivered as well,'' Cuomo said in his statement

Cuomo has aentry to drum up complaints against Dell.

Investors didn't seem to mind. In fact, they seemed relieved and bought into the stock. Analysts told Reuters that investors were pleased the rumor that Dell was in more trouble with the SEC was false.

Another reason for the share price gain was Michael Dell announcing plans to start selling personal computers in retail stores, basically turning the business model that had made the company so successful on its head.

Interesting times for Dell. Watch this space. Posted by: leon    Source