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Shareholders are outraged that the HP board is encouraging Léo Apotheker to chop the company up and retry the bid to compete with IBM/Oracle, which he previously failed at with SAP AG and was subsequently fired for.  (Source: Bloomberg News)

The investors are suing HP, trying recoup their losses based on the subsequent beating the stock took.  (Source: AFP)
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.

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).



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RE: Investors should have run when they hired him.
By Solandri on 9/16/2011 1:25:20 PM , Rating: 5
quote:
Who sits on these boards anyway? I thought these were wise business people. Some of the decisions they make border on insanity.

Probably the same people who approved the merger with Compaq, hired Carly Fiorina, and killed HP's calculator division (HPs were the Rolls Royce of calculators - not many sales but unquestionably the top brand). I'm reminded of a quote from Philip Greenspun after venture capitalists and MBAs wrestled control of his company away from him - it's "like watching a group of nursery school children who've stolen a Boeing 747 and are now flipping all the switches trying to get it to take off"


RE: Investors should have run when they hired him.
By kattanna on 9/16/2011 1:44:48 PM , Rating: 3
quote:
I'm reminded of a quote from Philip Greenspun after venture capitalists and MBAs wrestled control of his company away from him - it's "like watching a group of nursery school children who've stolen a Boeing 747 and are now flipping all the switches trying to get it to take off"


that quote made me laugh and cry at the same time because it is so true


By Samus on 9/18/2011 3:38:47 AM , Rating: 4
If I were Mark Hurd, I don't know if I would be laughing myself silly watching the HP empire crumble, or be utterly depressed over it.

He built that company. They were fine before they pushed him out over some ridiculous sex scandle.

Even President Bill Clinton wasn't outed, and he lied about it while running a whole country.


"There's no chance that the iPhone is going to get any significant market share. No chance." -- Microsoft CEO Steve Ballmer














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