U.S. judge orders Hewlett-Packard to face shareholder lawsuit

Fri May 10, 2013 4:23pm EDT
 
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* PC maker sued over statements preceding 2011 revamp

* More than $16 bln market value lost in two days

* Hewlett-Packard declines to comment

By Jonathan Stempel and Nate Raymond

May 10 (Reuters) - Hewlett-Packard Co must defend against a lawsuit accusing former management at the world's largest personal computer maker of defrauding shareholders by abandoning a business model it had long touted, causing more than $16 billion of market value to be wiped out.

U.S. District Judge Andrew Guilford in Santa Ana, California said shareholders had raised a "strong inference" that officials including former Chief Executive Leo Apotheker in June and July 2011 misled them about HP's commitment to the WebOS operating system and related products, including the TouchPad tablet PC.

"It is far from implausible that a corporate executive who had spent months building excitement and momentum around important, new technology products might recklessly misrepresent the inability to deliver on those promises," the judge wrote in a decision dated May 8 and made public the next day.

The lawsuit was filed after Apotheker shocked investors on Aug. 18, 2011 by announcing plans to refocus the company on business services and products.

He also announced plans to scrap WebOS, whose rights HP had obtained when it bought Palm Inc in 2010; pay $11.1 billion for British software company Autonomy Plc; and possibly spin off HP's personal computer business. The company also halted sales of the TouchPad, after just seven weeks on the market.   Continued...