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Senior Dell executives stretched the truth to hit numbers - does Google offer a better way?

Dell lied to hit its numbers. Google thumbs its nose at Wall Street on the numbers nonsense altogether. Could Dell pull a Google? Unlikely.

The Wall Street Journal is reporting that senior Dell executives stretched the truth (read: lied) about quarterly numbers in order to hit quarterly performance goals. The ensuing restatement of earnings will only reduce Dell's profit by $50 to $150 million, but given Dell's struggles, it's hardly welcome news.

It also points to the unhealthy demands that Wall Street may place on companies, something that Google has rejected with its "no guidance policy." Indeed, as the WSJ points out in another recent article, Google's policy of going its own way may pay rich dividends well beyond its relationship with Wall Street. But could Dell do the same?

The alternative is not pleasant. Dell's wrongdoing is non-trivial:

Dell disclosed that employees made improper account adjustments ranging from several hundred thousand to several million dollars to reach quarterly financial targets, which can have an effect on a company's stock price. Though they were generally small in size, Dell said that what it characterized as "errors and irregularities" were serious because of such factors as the number and qualitative nature of the issues -- and in some cases, the dollar amounts involved.

Which brings us back to Google. Is it demonstrating to the market a better way to conduct a public company? Or is it merely momentarily lucky, with a model that will fizzle over time?

Google's "let us do what we want" approach to Wall Street aside, experts differ on how durable its business methodologies will prove. While some suggest that Google is demonstrating a radically innovative way to bring new products to market, others disagree:

The problem, Prof. Eisenmann explains, is that Google's biggest opportunities exist in huge markets such as desktop office applications, electronic commerce or "middleware" that could take the place of Microsoft Windows. Conquering such markets, he believes, will require old-fashioned leadership from the top and a disciplined hierarchy to carry out big tasks.

Google's freewheeling culture can create lots of interesting little ideas, he observes. But that is no guarantee they can be developed into big revenue generators.

Maybe, maybe not. But I suspect the Dell executives would have loved to be able to blame their numbers miss on the 20% of time they were spending on "innovation," Google-style. :-)

Seriously, I think Google's approach to Wall Street - if not its approach to product development - is correct. The question will be whether the company can get away with putting off the analysts once the numbers slow down (and they will). For now, I'd much rather have a Google approach than a Dell approach. I think the temptation to fudge must be less....