HP Stock Buyback

Two of the major computer giants: Dell and HP, are currently fighting to acquire 3 PAR Inc., who specializes in data storage. Their competition has led to an intense bidding war, and the most recent bid, placed by HP, exceeds $2 Billion.

HP’s stock buyback expansion is not directly related to their current bid war over the 3 PAR company. However, they are expanding stock buybacks as a way to increase the confidence of their investors.

A boost in investor confidence is sorely needed by HP after their CEO Mark Hurd resigned in early August due to a scandal in his personal life. HP is hoping that this stock buyback increase can provide that spike in confidence.

Additionally, HP’s future earnings are looking up as well. Their projected earnings for 2011 are $5.05 a share, while the numbers for 2012 are up to $5.57 a share. This is a slight increase over the past predictions.

The buyback program is intended to prevent the market from being flooded with excess amount of HP stocks. If there are too many HP stocks available, demand for the stock falls, and thus so would the value.

Photo credit: DeclanTM / Flickr

Michael Dell

Dell was hit hard today with a $100 million settlement charge, ultimately putting an end to a five year investigation by the SEC. The U.S. Securities and Exchange Commission has been pouring through Dell’s financial records since 2005 upon allegations of inaccurate accounting and reporting practices.

Michael Dell, the founder and CEO of Dell, will also be facing a hefty fine that will have to come out of his own pocket. Dell, the CEO, will have to fork over $4 million due to the SEC uncovering a commercial, yet mostly hidden, relationship between Dell’s company and Intel.

According to the SEC, Dell has not been entirely honest with its customers with regard to their relationship with some of their hardware providers. Some aspects of Dell’s relationship with Intel should have legally been disclosed to the public, thus the computer industry giant will now face the consequences.

Dell set aside the $100 million in June of 2010 in preparation for finally resolving this dispute. That amount plus Michael Dell’s own $4 million ante closes all disputes regarding their history of faulty accounting, financial reporting, and nondisclosure of their ties to Intel.

Faulty Dell

Documents from a three-year-old lawsuit against dell were recently unsealed.  Dell was allegedly aware of their computers having faulty capacitors and knew the computers were likely to break.  Documents show that Dell shipped computers from May 2003 to July 2005 that were at risk of breaking, as they contained the faulty capacitors made by Nichicon.

The Dell OptiPlex computers containing the bad capacitors were mostly sold to business and government customers.  The bad capacitors are reported to break and potentially leak chemicals inside the computer, which in turn could also be potential to start a fire.  In a study by Dell, in a three-year span the bad capacitors were likely to cause issues up to 97 percent of the time.

Despite the growing complaints to Dell still continued to sell the faulty computers.  A Dell hired contractor conducted an investigation on the situation and discovered that Dells initial estimate of failing computers was off by ten times.  The contractor reported that Dell was also replacing defective motherboards with other defective motherboards.

In some released documents about how to handle questions around the faulty Dell systems, Dell salesman were instructed “not to bring this to customer’s attention proactively” and “Emphasize uncertainty.”  In another email from a Dell Employee to a Dell customer it was stated” We need to avoid all language indicating the boards were bad or had ‘issues’ per our discussion this morning.  So, it seems Dell employees were deliberately trying to conceal the growing capacitor problems.

The Dell lawsuit has not yet gone to trial.  Dell did not recall any of the OptiPlex Computers, and with the newly released court documents Dell may end up receiving many more complaints.  There are potentially a number of customers who are unaware of the issues that plague their Dell OptiPlex computers, or even why their computers had failed to begin with.

kofai / Flickr

The death of yet another Foxconn Technology employee while on-the-job has inspired yet another raise in salary for its Chinese laborers.

This is the second time in the past week the Chinese electronics manufacturer has responded to public scrutiny over its paltry wages paid out to its workers (many earning a meager $150 per month working 60-70 hours a week).

Foxconn is currently experiencing significant labor shortages and a disturbing trend of worker suicides in the factories. Still, the company employs approximately 800,000 workers, and remains a key manufacturer for Apple, Dell, Sony, and HP.

Company executives say that with the week’s two wage increases, worker salaries will potential reach $300 per month, which some still argue is not enough. On a positive note, that’s twice as much as most Foxconn employees were being paid just one week ago.

A consequence of increasing wage rates in China that American pocketbooks may begin to take the brunt of is that if it starts to cost more to make a product, the consumer will have to pay more for it. The question is: are Americans willing to pay more for their technology for the benefit of people overseas, whom they’ll probably never come in contact with?

The first pay raise hiked up wage rates for Foxconn factory workers to $176 per month. This new raise will only affect workers after a three-month probationary period after an employee’s hiring.