HP sued by shareholder; claims execs mislead investors

HP has not had a good past few weeks and now things just took on a new twist. Reuters reports that a shareholder in the company has filed a lawsuit against HP, claiming that the company's top management team hid the fact that its business model wasn't working. In August, HP announced that it would shut down its webOS hardware business, including its heavily hyped HP TouchPad tablet that ran on the webOS operating system.

Shareholder Richard Gammel claims in his proposed class action lawsuit, filed earlier this week in a U.S. District Court, that HP executives, such as CEO Leo Apotheker and CFO Cathie Lesjak, gave out positive statements about the company's financial health before August 18. That's when it revealed its shutdown of the TouchPad along with the fact that it was looking into alternatives for HP's PC business. If the class action lawsuit goes forward it will ask for damages for anyone who bought HP stock between November 22, 2010, and August 18. HP has yet to comment on the lawsuit.

HP has said it would prefer to spin off its its PC business into its own separate stand alone company so it can concentrate on its other business divisions. It is currently conducting a review of its PC unit and expects to make a final decision on the matter by the end of 2011. If it does decide to break off the PC business, HP has said it might take as long as 18 months to finally complete.

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HP, along with many MANY other companies cannot be trusted. Any corporations mission is to make money above anything else and some take it more serious than others. There has to be some responsibility on both sides, that being said...
It's sort of like the car salesman that tells you everything you want to hear and then when you're finalizing the purchase of the car you have to sign a paper saying that nothing the salesman told you can be held accountable.
Lawyers will argue over how legal the content of communications were, but I'll bet people that invest real money into HP will be the first to tell you that of course they believed otherwise or they wouldn't have invested in the first place. Then again, if were an unexpected boom, I doubt you'd be hearing much.

HP said we will suppport webOS then they said we will open webOS for other OEM and finally they dropped the ball.

It sound pretty fishy.

Since when is not being 100% truthful about your business model considering fraud? It's not like HP ever lied about their actual financial #s.

remixedcat said,
HP has always been crap in every way, this just makes it even worse.

Not their servers or business lines of PCs. Their printers are good, just their drivers have always sucked. All the problems they had with video cards in their laptops.

I've been saying for a while now that HP has GOT to be in poor financial health. This is the first admission to that fact I've seen though. I look forward to seeing how this proceeds, and am hoping to see some figures at some point. They just have to be in BAD shape to consider selling off the PC business. And honestly, buying WebOS and then not being able to invest in its success really said a lot as well.

M_Lyons10 said,
I've been saying for a while now that HP has GOT to be in poor financial health.

It's not a question of financial health, it's just a question of a new CEO taking HP in a new direction and slashing everything past CEO have done. It's almost as if Leo Apotheker decided that everything that was done to HP was sh*t. So he's cleaning up house and starting over with what he knows best, meaning big corporate stuff.

I think it was clear from the start that it was a very big risk.
A hardware company, was going on war with Microsoft, Apple and Google on the software front!

FMH said,
I think it was clear from the start that it was a very big risk.
A hardware company, was going on war with Microsoft, Apple and Google on the software front!

Those aren't there target companies in regards to software. Think IBM and you'll be closer. They're looking at a more corporate environment, not home user like the others.

farmeunit said,

Those aren't there target companies in regards to software. Think IBM and you'll be closer. They're looking at a more corporate environment, not home user like the others.

I was talking about WebOS.

Though you are right about the Autonomy Inc (the one HP will buy). It is an enterprise oriented company.

greenwizard88 said,
Sounds about right to me. I'd be furious if I recently purchased any HP stock.

Totally agree. This seems a bit delayed to me... maybe everyone was still a bit shocked / reaching for the phone to call their lawyers...

Medking said,

Totally agree. This seems a bit delayed to me... maybe everyone was still a bit shocked / reaching for the phone to call their lawyers...


You do understand that it takes a while for a lawsuit to be drawn up, filed, and then make it to the news, right? It has been less than a month since HP made the announcement, so how exactly is this "delayed"?