Court Documents Indicate Dell Concealed Computer Troubles

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Dell shipped 11.8 million computers over a two-year period, despite knowing the computers were at risk of breaking due to faulty components, according to a New York Times report on court documents unsealed Thursday. The court documents, which were part of a lawsuit filed by Advanced Internet Technologies against Dell, provide additional color to earlier reports that surfaced over the summer regarding Dell's lack of disclosure to customers.

Between 2003 to 2005, Dell (DELL) sold the computers to schools, governments and corporations, all without issuing warnings of potential component troubles, the Times notes. For example, Dell in 2004 expected 12% of its SX270 Optiplex computers to encounter trouble over a three-year period because of the faulty components. But within three months, it raised the forecast to 45% and noted it could reach as high as 97%, according to the Times.

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In 2005, Dell took a $300 million charge to cover replacement and repair costs of the faulty computers and this fall settled its Advanced Internet Technologies lawsuit, in which Advanced Internet accused the computer maker of hiding the PC defects from customers.




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