The wires are abuzz this morning about Dell's announcement that it will delay its Q2 financial filing its second quarter report. As I read those headlines I remembered a near-identical announcement Apple made just over a month ago that caused it to delay filing its quarterly report. That announcement led the NASDAQ to send Apple a notice noting that it no longer met financial reporting requirements of the exchange, and therefore should expect to be delisted. So if delays in reporting caused exchange officials to threaten Apple with delisting, we should expect Dell to receive a similar letter in about a month.
What does this options scandal and the threat of delisting mean for Dell? It means that investor confidence is at risk. If Dell is demoted to the pink sheets even temporarily, many mutual funds won't be allowed to own it according to their charters. That will create less demand higher volatility in the stock.
Now to be honest, I don't think that Dell will *ever* be demoted to pink sheets in the near future. They will just request a hearing as Apple did and plead their case. Frankly, if NADSAQ were to delist everyone who had an options problem nowadays, the NASDAQ 100 would turn into the NASDAQ 3. And I think they know that.
But it is the perception that Dell could be delisted that is dangerous. It raises Dell's risk profile dramatically, even if there is no actual risk. Perceptions of serious risk to investments are the makings of runs on banks and stock crashes.
The best strategy Dell could adopt to shore up confidence would be for Michael Dell o go back to being the public face of the company again. After all, he is the guy whose name is on the company, and he is the one that investors and shareholders will look to for assurance that the company isn't going down the tubes. The best thing Michael could do today is to say that he is going to personally drive the restatement process, vouch for the results, and guarantee nothing of the type will happen again. If he does that, Dell could weather this crisis and return better than ever. If he doesn't, the business is in for a long, tough slide.
Full disclosure: I own no Dell stock and do not have any positions with regard to Dell stock movements (i.e., no options, no short positions, etc.).