Dell's Halloween 'Trick' Haunts Investors

Jess Blackburn, a Dell spokesperson, said the problem involved a capacitor on the motherboard of two corporate desktop models -- the OptiPlex GX270 and GX280. According to Blackburn, the defective capacitor prevents systems from booting up. The problem develops months after the systems have shipped and is not universal. As a result, said Blackburn, the $300 million charge is not for a recall, but rather for the labor costs of making replacements in the field.

Blackburn would not name the supplier of the part and said that Dell expects the $300 million charge to cover all future costs associated with the issue.

The charge also includes the costs of a workforce realignment, product rationalizations and excess facilities. "These actions are designed to streamline the business to improve operating efficiency," Dell said. The company began a round of layoffs affecting 1,000 employees yesterday, according to a note by Moors & Cabot. A good chunk of this includes engineering and procurement personnel in Austin, the firm said.

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