NEW YORK, Feb. 19, 2020 /PRNewswire/ -- Today, prominent
investor rights law firm Bernstein Litowitz Berger & Grossmann
LLP ("BLB&G") filed a class action lawsuit for violations of
the federal securities laws in the U.S. District Court for the
Northern District of California
against HP Inc. ("HP" or the "Company") and certain of the
Company's current and former senior executives (collectively,
"Defendants") on behalf of investors in HP common stock between
February 23, 2017 and October 3, 2019, inclusive (the "Class
Period").
BLB&G filed this action on behalf of its client, the
Electrical Workers Pension Fund, Local 103, I.B.E.W., and the case
is captioned Electrical Workers Pension Fund, Local 103,
I.B.E.W. v. HP Inc., No. 3:20-cv-01260 (N.D.
Cal.). The complaint is based on an extensive proprietary
investigation and a careful evaluation of the merits of this
case. A copy of the complaint is available on BLB&G's
website by clicking here.
HP's Alleged Fraud
Based in Palo Alto, California,
HP is a global provider of personal computers, printers and related
supplies, solutions, and services. One of the Company's
primary segments is Printing, which encompasses the Supplies
business unit consisting of ink and laser cartridges and other
consumable products. The Supplies business has been a
significant revenue driver for HP. The claims alleged in this
case arise from Defendants' misrepresentations and omissions
concerning HP's fundamental changes to its Supplies business
strategy, which the Company called its "four-box model." For
several years, the Company measured its Supplies business through
this model.
The complaint alleges that, throughout the Class Period,
Defendants falsely emphasized that the four-box model was an
accurate, reliable tool to determine demand and revenue in the
Company's Supplies business, and reassured investors that, based on
the four-box model, HP had a "clear line of sight to supply
stabilization." Defendants repeatedly made false and
misleading statements to investors about the reliability of the
Company's four-box model and the revenue growth of the Supplies
business, touting their "continued confidence in the predictive
value of the four box model" and stating that the Company's
"Supplies revenue is in line with the expectations that we set, and
that our 4-box model continues to drive predictability." As a
result of Defendants' misrepresentations, shares of HP's common
stock traded at artificially inflated prices during the Class
Period.
The truth emerged through a series of disclosures, beginning on
February 27, 2019, when HP reported
disappointing total Supplies revenue for the first quarter of
fiscal 2019. Significantly, in reporting these results, the
Company admitted that its four-box model had been based upon
incorrect data concerning inventory, market share, and pricing
assumptions. The Company revised its market share and pricing
assumptions and announced a plan to lower channel inventory levels,
which created a $100 million headwind
to the Company's Supplies revenue for the remainder of fiscal
2019. As a result, HP reduced its previous Supplies revenue
guidance for fiscal 2019. On May 30,
2019, the Company admitted that the consumer segment of the
Supplies business had had telemetry data for years, such that
management should have known all along the importance of telemetry
data for an accurate model and yet hid the fact that the commercial
Supplies business lacked this key input.
Then, on August 22, 2019, HP
announced that its Chief Executive Officer, Dion Weisler, would step down at the end of
October 2019, attributing the reason
to a family health matter. HP also announced disappointing
earnings results for the third quarter of fiscal 2019, with
Supplies revenue down 7% year-over-year. The Company also
further reduced its Supplies revenue guidance for fiscal 2019.
Finally, on October 3, 2019, after
the market closed, HP announced that it was "departing from the
purely transactional Supplies-centric business model" and moving
away from using the four-box model, transitioning instead to a
hardware-driven business model. Under the new business model,
the Company would de-emphasize Supplies revenue "as the singular
metric to determine our progress" and instead focus on "the key
metrics [of] service growth and operating profit dollars, which
better reflect[] the system profitability." The Company also
announced mass layoffs as part of a major restructuring, in which
it expected to cut between 7,000 to 9,000 positions, or up to 16%
of its global workforce, over three years. As a result of
these disclosures, the price of HP common stock declined
precipitously.
If you wish to serve as Lead Plaintiff for the Class, you must
file a motion with the Court no later than April 20, 2020, which is the first business day
on which the U.S. District Court for the Northern District of
California is open that is 60 days
after the publication date of February 19,
2020. Any member of the proposed Class may seek to
serve as Lead Plaintiff through counsel of their choice, or may
choose to do nothing and remain a member of the proposed Class.
If you wish to discuss this action or have any questions
concerning this notice or your rights or interests, please contact
Michael D. Blatchley of BLB&G at
212-554-1281, or via e-mail at michaelb@blbglaw.com.
About BLB&G
BLB&G is widely recognized worldwide as a leading law firm
advising institutional investors on issues related to corporate
governance, shareholder rights, and securities litigation.
Since its founding in 1983, BLB&G has built an
international reputation for excellence and integrity and pioneered
the use of the litigation process to achieve precedent-setting
governance reforms. Unique among its peers, BLB&G has obtained
several of the largest and most significant securities recoveries
in history, recovering over $33
billion on behalf of defrauded investors. More
information about the firm can be found online at
www.blbglaw.com.
Contact
Michael D. Blatchley
Bernstein Litowitz Berger & Grossmann LLP
1251 Avenue of the Americas, 44th Floor
New York, New York 10020
(212) 554-1281
MichaelB@blbglaw.com
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SOURCE Bernstein Litowitz Berger & Grossmann LLP