AMD chips win broader Dell approval

Good news for AMD as Dell plans to expand its use of the company’s chips, but the PC maker also reveals poor Q2 results and an SEC investigation

Dell’s announcement of a broader relationship with AMD could not overshadow poor second-quarter results and news of a federal investigation into its accounting.

As expected, the world’s largest PC maker announced on Thursday that it will ship Dimension desktops and two-processor servers equipped with AMD’s chips by the end of the year. Its first embrace of AMD products came in May, when it announced plans to ship a four-processor server based on the chips.

But also on Thursday, Dell revealed that the Securities and Exchange Commission (SEC) is conducting an informal investigation into some of its accounting practices, including revenue recognition and end-of-quarter policies.

Dell received a letter from the SEC in August 2005, but it is only disclosing the probe now because it has found “some potential issues” during its own review of its accounting practices, said Jim Schneider, Dell’s chief financial officer. Dell does not expect the issues to have a material effect on its finances, he said.

In its second fiscal quarter, ended 4 August, the PC maker’s revenue was $14.1bn ?¢‚Ǩ‚Äù a 5 percent increase, compared with last year. Net income was $502m, down sharply from $1bn a year ago. Earnings per share came out to 22 cents, exactly what the company had predicted in July, but 10 cents below initial expectations.

On a conference call after the AMD announcement, Dell chief executive Kevin Rollins cited the cost advantage the PC company would enjoy, as well as AMD’s technology, as the reasons behind the move.

“There is a value in choice,” Rollins said. Desktops with AMD’s processors will appear next month, while the servers are planned for later in the year, he said.

Full story: ZDNet UK