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Dell sued for chip kickbacks

Class action case and management cuts

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Dell shareholders are suing the computer maker over allegations it took kickbacks from Intel to maintain an exclusive relationship with the chipmaker. The class action suit alleges Dell's profits were inflated by as much as $800m a year by the payments. The money was paid as long as Dell rejected chips from rival supplier AMD. Dell only started offering machines with AMD processors last year.

The case, filed in Austin, Texas, alleges the computer maker failed to properly account for the money and defrauded shareholders. The filing was made Wednesday last week - the same day Dell announced Kevin Rollins would be replaced as CEO by Michael Dell.

The filing was made by law firm Lerach, Coughlin, Stoia, Geller, Rudman & Robbins LLP acting for two institutional investors.

One of the lawyers involved told AP that they do not allege that the payments were illegal, just incorrectly accounted for. The suit names 16 current and former Dell staff as well as accountancy firm PriceWaterhouseCoopers and Intel.

Dell is also under investigation by the Securities and Exchange Commission, and faces other suits over allegations that it knowingly sold faulty laptops.

In other news, returning CEO Michael Dell sent an email to staff on Friday which said the company would not be paying bonuses this year - but there would be some discretionary awards and pay rises. He said the last year had seen great efforts, but not great results, and blamed bureaucracy for the problems.

He said the company would cut the number of top managers from 20 to 12 and would not be hiring a chief operating officer.

The company's European boss Paul Bell is taking over the US business.

More from the Austin American Statesman here. ®

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