Wisecracker :
As noted, this has nothing to do with the FTC concerning the anti-competitive efforts concerning Intel/Dell and AMD.
Dell to Pay $100 Million Settlement
July 22, 2010
...
The S.E.C. had accused Dell of misleading investors by using money the company received from the chip maker Intel to pad its quarterly earnings statements. Company executives, according to the S.E.C., relied on the payments from Intel to meet or surpass Wall Street’s expectations.
Intel paid Dell in the form of rebates as part of an agreement to ensure that Dell would not use computer chips made by Advanced Micro Devices in its personal computers and computer servers, according to the civil charges...
From 2003 through 2007, the payments to Dell from Intel totaled $4.3 billion, the S.E.C. said. Though the payments were said by the two companies to be based on complex pricing assessments, the S.E.C. said detailed schedules drawn up by the companies were “a meaningless exercise” to make the payments appear to be something other than what they were.
So Intel 'payola' effectively kept Dell in business to the detriment of AMD.
Directly relating to the above: We may read
THE SEC COMPLAINT FILED WITH THE COURTS Most of it covers a lot of information already discussed. But there are some VERY interesting points starting on page 15 - Items 37, 38, and 39 - which indicate that Dell was more than willing to (and likely did) bend Intel over the table for more. These continue on the following pages, giving some details which show that Dell actually ended up using Intel as a second pocketbook to meet EPS forecasts (page 17, items 43 and 44). And it gets REALLY interesting as you go further.
Item 50:
"In the 20 Quarters during this period, from Q1FY02 to Q4FY06, Dell met analysts' EPS consensus in 15 quarters, exceeded consensus by 1 cent in 4 quarters, and exceeded consensus by 2 cents in 1 quarter. Dell would have missed EPS consensus in every quarter had it not received MCP payments from Intel."
The next section shows that Dell not only knew they were dependent on Intel money, but also modelled the financial impact...
Payola, it is. But the court documents seem to indicate that Michael Dell, and company, Judo'd Intel's MCP program and negotiated themselves into a position where Dell appear to be the senior partner in the relationship. All the way to, and past, the point where Dell became dependent on payments from Intel in order to meet earnings expectations.
Basically: Dell used the threat of AMD to beat ever more and more money out of Intel. Not necessarily a terrible thing
(though clearly tough on the AMD sales team who had Dell on their target list). After all, there is nothing illegal about Exclusivity agreements. And Dell were clearly a willing, if not enthusiastic, partner in the whole arrangement. Out of Greed at first, then out of necessity since they came to depend on Intel hand outs to make up earnings Dell didn't/couldn't get for themselves. What landed Dell Corporation in court wasn't "exclusivity" or having/creating this agreement. Not at all. It was that they knowingly lied about where the money was coming from to the SEC and the Industry Analysts during their earnings calls.
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