hurricanemaxi
Joined: 17 Sep 2011
Posts: 83
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 Posted: Sat Sep 17, 2011 8:16 am Post subject: Shareholder Rebellion: Suit Filed Against HP Following Drast |
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Outrage is growing at new CEO's wild restructuring plans
Hewlett-Packard Company's (HPQ) CEO Léo Apotheker has quite the troubled past. As the leader of SAP AG (ETR:SAP) he was fired for failing to help the company keep pace with American business software rivals International Business Machines, Inc. (IBM) and Oracle Corp. (ORCL). To make matters worse, on his watch SAP engineers copied Oracle source code in an infringement case that ended up costing SAP $1.3B USD.
To the shock of many, HP's board hired on Mr. Apotheker to replace the departing Mark Hurd and allowed him to drastically transform the company, killing its webOS mobile devices and working to spin off the company's personal computer unit, which is currently leading in global and U.S. sales.
Many shareholders were appalled at the board's decision to allow Mr. Apotheker to chop up the company and retry the enterprise software bid he already failed once at. Plummeting share prices in the wake of these decisions equally appalled them. They've now taken up legal arms and are suing the company for damages.
The suit, reported by Reuters, was filed by high-power San Diego, Calif. law firm Robbins Geller Rudman & Down. Robbins Geller Rudman & Down cites its specialty as "Focusing on the representation of defrauded investors."
Indeed, the firm claims exactly that in the HP case. It says that HP and its CEO planned well in advance to cut loose the profitable PC business and to bury the webOS device lineup. They accuse HP of hiding these plans from investors, which allowed stock prices to be artificially inflated.
When the company abruptly announced the plans during its quarterly earnings report, the stock dropped 20 percent in a single day, the largest drop since the Black Monday stock market collapse of 1987.
The suit seeks class action status for anyone who bought HP stock between November 22, 2010, and Aug 18 of this year. The suit's first named plaintiff is Richard Gamel, a major shareholder who lost a great deal of money after HP's wild change of course plunged the company's stock.
Some view HP's plans with cautious optimism. After all, despite Mr. Apotheker's questionable track record, HP's enterprise software business is its most profitable asset and IBM went through a similar divestment of its own personal computer lineup.
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