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
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.
However, critics are quick to attack that theory. When IBM sold its
personal computer line to the Lenovo Group, Ltd. (HKG:0992) it was currently in fifth place in the
market and the unit was a much smaller part of the company's total revenues, so
it was much less of a culture shock. Furthermore, critics point out that
IBM and Oracle typically practice a shrewd acquisition strategy most acquiring
"bargains". By contrast, the critics say, HP is thought to be grossly overpaying with its $12B bid for UK enterprise software powerhouse Autonomy, Corp. Plc. (LON:AU).