Did HP Bilk Its Shareholders?

jfruhlinger writes "About a month ago, HP announced that it was getting out of the PC, tablet, and mobile phone business to focus on software services, at which point, rather predictably, HP's stock plunged. Obviously, HP's leadership had been working on this plan for some time before it was announced, which leads to the question: did they deliberately mislead their stockholders by not being more transparent? That's what a shareholder lawsuit against the company alleges. How the courts treat the suit could have interesting implications for how transparent public corporations need to be about future strategy."

Re:Insider trading

[funkatron]

Where have you been for the last 5 years?? Anything that helps banks to make money is a fantastic idea!!! The banks must always be profitable!!

Re:Short Answer?

[NoNonAlphaCharsHere]

Shorter answer: No. Should corporations (really management/boards) have to disclose when they're going to release a new product that's going to be the next iPhone (on the good extreme) or the next Matrix Revolutions (at the other extreme). And what time-horizon are people to use for this crystal-ball gazing? Wouldn't IBM's management have been equally culpable for their decision to leave the PC market? Or how about bet-the-company gambles? I think we probably already have enough "you should have....." lawsuits already.

Re:Alternative

[Attila Dimedici]

The question becomes how far in advance of making the announcement had the decision been made and, more importantly, did any executives involved in delaying the announcement receive elevated bonuses because the stock had not yet taken the hit from the announcement (even though the decision was already made). If the decision was delayed for the purpose of ensuring that certain executives would receive a larger bonus than they would have if it was announced sooner, those suing have a case. Of course they would still have to prove that this actually was the reason for the delay.

Absolute nonsense

[Tridus]

The company is changing strategy. This happens. Companies don't survive when they can't do this. They also don't survive when they have to broadcast to their competition in advance that they MIGHT do something before a decision has been made.

This is nothing short of lunacy. It shows not only how insanely lawsuit happy the US is, but also how paralyzing a public corporate structure has become. It's much better to be a private company these days. You've got far less onerous reporting requirements, far less overbearing regulation, and the freedom to actually do things as a company without facing constant lawsuits.