A lawsuit is claiming HP execs misled investors prior to the decision to partly withdraw from the consumer market
Hewlett-Packard has been hit with a lawsuit alleging that senior executives misled investors prior to its decision to sell off its webOS unit and dump the TouchPad tablet.
HP’s CEO Leo Apotheker made the shock announcement last month that it was shutting down its webOS hardware division, signalling an end to HP’s dual pronged attempt to crack the consumer market with its TouchPad tablet and Palm-based smartphones.
Apotheker also revealed that HP is seriously considering the divestiture of its personal computer businesses, similar to what IBM did in 2005 when it offloaded its PC business to China’s Lenovo.
HP also revealed at that time that it was buying UK-based software specialist Autonomy Corp for a staggering $12 billion (£7.5bn), triggering concerns that it is overpaying for the company.
The result of these decisions was all too clear on HP’s stock price, as investors fled the technology giant.
On the day of the announcement, HP’s stock closed at $29.51 (£18.63) on the New York Stock Exchange, an all-time low for the company. But worse was to follow and the next day the stock fell a further 20 percent, its biggest single-day drop since the Black Monday stock market collapse of 1987.
And the stock price has still not recovered, trading at $23.29 (£14.70) as of this Friday afternoon.
This has understandably not gone down well with HP’s shareholders, one of whom has now launched a lawsuit against HP.
The lawsuit was filed in US District Court, and specifically accuses HP executives including CEO Leo Apotheker and CFO Cathie Lesjak of misleading investors by making positive statements about the company’s performance that later proved unfounded.
The lawsuit seeks to recover unspecified damages on behalf of any who bought into HP between 22 November, 2010, and 18 August of this year, arguing that the lack of disclosure about potential issues means its shares were artificially inflated.
It should be noted however that lawsuits of this nature are fairly common in the United States following a significant fall in the share price.
So far Leo Apotheker has not faced any direct calls from shareholders to step down.