Ingram Micro, McAfee Pay Fiddler for Channel Stuffing

Ingram Micro (IM) and security vendor McAfee have done the dance and are now paying the fiddler. The two companies reportedly engaged in a channel stuffing scheme over the course of two years that in turn boosted revenues for McAfee and profit margins for Ingram Micro. Ingram Micro now has paid a $15 million fine to the U.S. Securities and Exchange Commission; McAfee was fined $50 million back in 2006. The money will go to McAfee shareholders.

Allegedly, McAfee switched to a “sell-in” accounting method, accounting for products sold into distribution rather than waiting for those goods to reach the end user. McAfee provided Ingram Micro with favorable terms, thereby initiating a circular arrangement where Ingram Micro accepted more goods than it expected to sell, inflating McAfee’s revenue.