HP sued by shareholder over claims of misleading investors

HP sued by shareholder over claims of misleading investors

Summary: Hewlett-Packard boasted about the expected success of the HP TouchPad ahead of its release as most manufacturers do about their products. But now that has at least one shareholder steaming mad.

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Hewlett-Packard is being sued by one of its shareholders following the sudden dismissal of webOS and the HP TouchPad in August.

Specifically, Reuters reports that shareholder Richard Gammel is accusing HP of covering up and not admitting to investors that webOS wasn't actually central to the business model of the company anymore even while it was building up the HP TouchPad.

The suit also claims that HP executives -- especially CEO Leo Apotheker and CFO Cathie Lesjak -- of making positive statements about the state of HP that "later proved unfounded."

Now, all executives try to sound positive to investors so as not to stir things up and scare them away. Additionally, it's only natural in business to boast about and promote products before their releases to gain interest. Just look at RIM trying to save face and tout the BlackBerry 7 smartphone series (and even the PlayBook) today.

But if HP's leaders were flat out lying about the corporation's financial well-being, then that's a major problem -- as would if it was discovered that HP was planning to jettison webOS before the TouchPad even launched.

Nevertheless, if Gammel succeeds and proves that HP was negligent and dishonest with its investors, then damages would be awarded to anyone that bought HP shares between November 22, 2010, and August 18, 2011 -- the same day that HP gave up on webOS and its related products.

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Topics: Hewlett-Packard, Banking

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3 comments
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  • It wasn't knee-jerk

    <ul><i>if it was discovered that HP was planning to jettison webOS before the TouchPad even launched</i></ul><p>I think it's almost a certainty that that's the case. I think the TouchPad (and WebOS) got tossed as part of the decision to exit the PC business, and I do not believe they made a decision that large in the time between the TouchPad's announcement and the announcement that they were going to spin out the PC business.

    Somewhere in that company there are people who have been studying the spinoff for months... analyzing its potential effects on revenues, share price, etc., trying to figure out how much they might get for it, and so on. It may be that only Apotheker and Lesjak -- and a consulting firm they hired -- knew anything about it. Which is how it could happen that a whole bunch of HP'ers worked every day for months on a product that was doomed before it was even released.
    Robert Hahn
  • Executives are like politicians

    Always talking out of both sides of their mouth and putting a spin on everything they say.
    otaddy
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