Dell Inc. (NDAQ:DELL) fell after hours today after it released its 8K filing to the SEC, which announced disappointing earnings and revealed that it is currently involved in an informal SEC investigation into the ways it booked revenue during the past year.

Dell's earnings were cut in half from $0.41/share a year ago to just $0.22/share today, which was below analyst expectations. The company attributed this to "aggressive pricing in a slower market". Perhaps as a consequence, Dells market share did increase by 6% to 19.3% - most of that growth coming from outside of the United States. The company's CEO said the following:

"While we are disappointed with the results for the quarter, we are taking the necessary actions to correct missteps and improve our results for the long term," said Kevin Rollins, Dell chief executive officer. "Key actions include accelerating cost initiatives, increasing investments in service and support, and better pricing management."

Meanwhile, the company also announced an SEC investigation:

"In August 2005, Dell received notice from the U.S. Securities and Exchange Commission that it was conducting an informal investigation of the company. The notice stated that the investigation is not an indication that any violations of law have occurred. The SEC has requested information relating to revenue recognition and other accounting and financial reporting matters for certain past fiscal years, and Dell has been cooperating. In the course of responding to the requests, the company recently discovered information that raises potential issues relating to certain periods prior to fiscal 2006. While the company does not believe that these issues have had or will have any material impact on its financial position or the reported results of operations for the relevant years, the company's audit committee, upon the recommendation of management, has initiated an independent investigation. Management is committed to addressing any questions, concerns or issues the SEC or the audit committee may have."

Note that companies are not required to disclose anything that is not material. As a result, this is the first time we've heard of this SEC investigation dating back to August of 2005. The cause for concern is that the company's internal investigation has "discovered information that raises potential issues relating to certain periods prior to fiscal 2006". Whether or not this will have a material affect on the company has yet to be seen; however, it is something that will be held over Dell's head until resolved.

Currently, Dell is trading at a PE of around 19, which is at a discount to their industry and most of their peers. Provided Dell is able to find itself innocent of any wrong doings with the SEC and recover from its pricing mistakes, it could represent a great buy at these levels.

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TriPath Imaging Inc. (NDAQ:TPTH) was bought out by Becton, Dickinson and Co. (N:BDX) on Monday for $9.25/share in an all-cash transaction. According to the company's 13D filing with the SEC:

"BD has elected to convert its filing on Schedule 13G, filed with the Securities and Exchange Commission (the "SEC") on August 8, 2001, into a filing on this Schedule 13D to reflect its decision on August 14, 2006 to submit to the Issuer's Board of Directors a letter, dated August 14, 2006 (the "Proposal Letter") containing a non-binding proposal to acquire all of the issued and outstanding Common Stock of the Issuer, that BD does not currently own, at a valuation of $9.25 per share in cash in a merger transaction (the "Proposal"). The Proposal also contemplates the payment of such cash consideration to all holders of existing options, stock appreciation rights and warrants granted by the Issuer."

This announcement came as a suprise to many shareholders, as the stock doubled on Monday to its current $8.87 level (still a 4% discount to the buyout price). Most of the suprise was due to the fact that BDX announced this in their initial 13D filing! So, there was no prior evidence that BDX was even remotely interested in TPTH shares before Monday... Under the agreement, the acquisition won't be going through until the first quarter of 2007, which leaves plenty of time for other companies to place a bid. So, TPTH is a great stock to put on the radar incase anything else does come along. Any future bids would likely be tipped off by BDX moving up their deadline or strange price activity.

This acquisition also illustrates a key concept that goes along with trading based on insider ownership - a way to tell if the buyers are interested in acquiring the company. One hint, or tip-off, in this case was the massive insider selling that suddenly stopped shortly before this acquisition. A quick look at their SEC filings shows massive selling via Form 4s before and during June. These sales occurred almost every day like clockwork! Suddenly, on June 2nd, they stopped and never resumed. So, what happened? The law says that insiders are not allowed to buy or sell when they know their company would receive an offer - this would be insider trading. Although the 13D filed was the first indication of a third party interested in acquisition, the suddenly decline in insider selling could have tipped off the fact that something was going on that would benefit the company's shareholders. This is something to watch if you are holding shares in a company that could be a potential acquisition target.

InnerWorkings, Inc. (NDAQ:INWK) IPO'd today at $9/share, raising over $95m to help fund its future growth. The printing procurement provider's stock quickly rose to over $10.80 today, representing a gain of over 19% on the day. Is this a stock to be looking at? Although it is difficult to value a stock that has just IPO'd, the company's S-1 filing with the SEC can give us a good idea of what to expect.

InnerWorkings was formed in 2001 to provide an outsourcing platform for printing products though its web portal. Since it began operations in 2002, the company has enlisted over 2,700 suppliers in its database and serves over 1,100 clients (with over 97,000 bids). The company's financials also show strong growth of about 148% per year, with revenues moving from $5m in 2002 to $76.9m in 2005. How is the industry? Well according to their filing:

"Our business of providing print procurement solutions intersects two large and growing industries, commercial printing and business process outsourcing, or BPO. Total shipments in the worldwide commercial print industry were projected to be approximately $367 billion in 2005 and are expected to increase by an average of $8 billion per year through 2009, according to a 2005 Datamonitor global commercial printing industry profile. To become more competitive, many businesses seek to focus on core competencies and outsource non-core business functions, such as print procurement. According to a 2005 IDC global BPO forecast, the worldwide market for BPO is estimated to grow from $422 billion in 2005 to $641 billion in 2009, representing a compound annual growth rate of 11%."

One of the key factors to consider when looking at a new company's potential is its "disruptive" capability. High growth companies typically provide a new technology that disrupts the current market place. For example, Dell used the Internet and commoditization to disrupt the market for PCs. InnerWorkings believes that its technology will disrupt the printing industry by further commoditizing its products and better connecting products with customers (not unlike what Dell did to PCs). In the company's S-1 filing, they stated:

"Our fully-integrated print procurement solution disrupts the traditional print supply chain by aggregating the collective print demand of our clients and greatly increasing the number of suppliers that can efficiently bid for our clients’ print jobs. Our print procurement costs are often 30 to 50% less than the print expenditures historically incurred by our clients, and we believe that we offer a compelling value proposition to our clients by passing on to them a considerable portion of such cost savings. In addition, our solution reduces the amount of internal resources our clients must dedicate to print procurement, accelerates the print procurement process and consistently delivers a high-quality product. We believe that our business model, which is unencumbered by commercial print production assets, offers the first enterprise solution capable of meeting the entire print procurement needs of corporate clients."

One of the major risk factors associated with the business is competition coming into the market - especially given its potential. The two major factors combatting this are the company's proprietary technology and their large supplier network. The company also has a very capable management team and a scalable business model on their side.

Overall, the company is in a solid position fundamentally to disrupt the market for print outsourcing; however, the limited financial data makes it difficult to come up with a valuation for the company, especially given the fact that it has only been in operation since 2002. This company is definitely worth keeping an eye on, however, as we learn more about it in future filings with the SEC.