HP settles securities class action for $57 million

Settlement hopes to end investor issues with restructured business plans

When a company as large as Hewlett-Packard (HP) makes business decisions, there’s bound to be some collateral damage. On March 31, the computer giant announced that it would settle investor claims that a series of decisions it made in 2011 deviated so far from its historical business model that they were essentially fraudulent.

In August of 2011, HP announced that it would retune its model, startling investors and leading many to decry future plans. The change in direction was heralded by the acquisition of Autonomy PLC for $11 billion, the retirement of the WebOS platform HP had recently acquired from Palm Inc. and the potential to split HP’s personal computer operations from larger operations as the company sought to move into the networking and enterprise technology space.

As a result of the course correction, which was delivered by CEO Leo Apotheker, share prices fell more than 25 percent on Aug. 19. Plaintiffs argued that because of HP’s steeped history in the manufacture and sale of PCs this announcement was misleading and filed suit shortly after.

In the settlement, HP has agreed to place $57 million into an escrow account once it had the go ahead from the presiding judge. The plaintiffs in the case include a number of institutional investors, among them a number of pension funds.  

"We are very happy with the settlement and are glad to have achieved this recovery for the affected HP shareholders," said Jonathan Gardner, co-lead counsel for the class in an interview with Reuters.

The payout is not the only snag that HP as a result of its new direction. Earlier this year HP accused Autonomy of inflating revenue ahead of the buyout deal, with an investigation that is still ongoing.

 

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Managing Editor

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Chris DiMarco

Chris DiMarco, Managing Editor of InsideCounsel magazine, has a background in multimedia production with previous involvement in projects in which he developed and created content for...

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