Case | HBS Case Collection | September 1995 (Revised June 2002)

Intel Pentium Chip Controversy (A), The

by V.G. Narayanan and James D Evans

Abstract

Following Intel Inc.'s decision to replace flawed Pentium chips, the company faces revenue recognition choices. Events leading up to IBM's decision to halt shipment of computers that have Intel's microprocessor inside and Intel's decision to replace all the flawed chips are outlined. Intel must decide whether to: make a provision for the costs of replacing the chips, defer recognition of revenue on the flawed chips that it has now agreed to replace, or make no entries on grounds of materiality.

Keywords: Business or Company Management; Decision Choices and Conditions; Revenue Recognition; Computer Industry;

Citation:

Narayanan, V.G., and James D Evans. "Intel Pentium Chip Controversy (A), The." Harvard Business School Case 196-091, September 1995. (Revised June 2002.)