Shareholder sues HP over claims it misled investors

HP boasted about the expected success of the TouchPad ahead of its release as most manufacturers do about their products. But now that has at least one shareholder steaming mad.

Rachel King Staff Writer
Rachel King is a staff writer for ZDNet based in San Francisco.
Rachel King
HP TouchPad
HP discontinued its TouchPad. James Martin/CNET

Hewlett-Packard is being sued by one of its shareholders following the sudden dismissal of webOS and the HP TouchPad in August.

Specifically, Reuters reports that shareholder Richard Gammel is accusing HP of covering up and not admitting to investors that webOS wasn't actually central to the business model of the company anymore even while it was building up the HP TouchPad.

The suit also claims that HP executives--especially CEO Leo Apotheker and CFO Cathie Lesjak--made positive statements about the state of HP that "later proved unfounded."

Now, all executives try to sound positive to investors so as not to stir things up and scare them away. Additionally, it's only natural in business to boast about and promote products before their releases to gain interest. Just look at RIM trying to save face and tout the BlackBerry 7 smartphone series (and even the PlayBook) today.

But if HP's leaders were flat out lying about the corporation's financial well-being, then that's a major problem--as it would be if it was discovered that HP was planning to jettison webOS before the TouchPad even launched.

Nevertheless, if Gammel succeeds and proves that HP was negligent and dishonest with its investors, then damages would be awarded to anyone that bought HP shares between November 22, 2010, and August 18, 2011--the same day that HP gave up on webOS and its related products.

This story was originally published at ZDNet's Between the Lines.