HP Inc. (NYSE: HPQ) Investor Securities Class Action Lawsuit 02/20/2020

If you purchased a significant amount of shares of HP Inc. (NYSE: HPQ) between February 23, 2017 and October 3, 2019, and / or if you purchased any NYSE: HPQ shares prior to February 2017 and continue to hold any of those shares, you have certain options and for certain investors are short and strict deadlines running. Deadline: April 20, 2020. NYSE: HPQ investors should contact the Shareholders Foundation, Inc.

To have your information reviewed for options and to recieve notifications about this case, please use this form. You may also send an email to mail@shareholdersfoundation.com, or call us at (858) 779-1554.
Company Name(s): 
Hewlett-Packard Company
Case Name: 
Hewlett-Packard Company Shareholder Class Action Lawsuit 02/20/2020
Case Status: 
Lawsuit Filed
Affected Securities
NYSE: HPQ
Lawsuit Overview
Type of Lawsuit: 
Shareholder Class Action
Date Filed: 
02/20/2020
Class Period Begin: 
02/23/2017
Class Period End: 
10/03/2019
Court of Filing: 
U.S. District Court for the Northern District of California
Deadline To File for Lead: 
04/20/2020
Summary: 

An investor in shares of HP Inc. (NYSE: HPQ) filed a lawsuit in the U.S. District Court for the Northern District of California over alleged violations of Federal Securities Laws by HP Inc. in connection with certain allegedly false and misleading statements made between February 23, 2017 and October 3, 2019.

On June 21, 2016, HP Inc. reported that its Supplies business was facing numerous challenges. As a result, HP Inc. announced a one-time investment of $450 million to buy back supplies from its channel partners to better align supplies inventory levels with demand, with the goal of stabilizing supplies revenue by the end of fiscal 2017. HP Inc. also announced the fundamental shift in its Supplies business from a push strategy to a pull strategy, which involves aligning channel supplies inventory levels with current demand and marketing efforts to drive print relevancy and strengthen HP's Supplies brand value.
In early 2017 HP Inc. assured investors that its new approach of managing and aligning demand and inventory in its Supplies business would avert the types of problems that necessitated the $450 million buy-back. The centerpiece of this new approach was focused on what HP Inc. called its "four-box model." For several years, HP Inc. measured its Supplies business through this model, which focuses on the four key drivers of revenue growth: in-store base, usage, market share, and price.
HP Inc's four-box model became the primary focus of HP and its investors because HP assured investors that its use of the four-box model enabled it to accurately assess demand for products in its Supplies business and manage the inventory placed in its sales and distribution channels. Throughout the Class Period, HP emphasized the four-box model as an accurate, reliable tool to determine demand and revenue in the Supplies business, and reassured investors that, based on the four-box model, HP had a "clear line of sight to supply stabilization." Defendants repeatedly highlighted the reliability of HP'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 HP's "Supplies revenue is in line with the expectations that we set, and that our 4-box model continues to drive predictability."
On February 27, 2019, HP Inc. reported that total Supplies revenue was down 3%, with a 9% decline in HP's Europe, the Middle East, and Africa ("EMEA") market, for the first quarter of fiscal year 2019. On an earnings call held that day, HP management attributed the shortfall to weaker than predicted demand from commercial customers in EMEA driven by an increase in online sales, where HP had a lower market share and faced more competition from cheaper third-party alternatives than in the U.S. HP, however, admitted to a larger problem with its four-box model: it had been using incorrect data concerning inventory, market share, and pricing assumptions. Thus, contrary to its previous statements, HP in fact had limited "visibility into the downstream channel ecosystem." As a result, HP had too much inventory in its Supplies channel network that was not selling through. HP also revealed that it lacked telemetry data - data provided automatically by remote units, such as printers that have been sold to customers, which apprise HP about the level of usage and need for new toner - to determine reliable market share assumptions for its Supplies business.
Then, on August 22, 2019, after the market closed, HP Inc. announced that Dion J. Weisler ("Weisler"), HP's President and Chief Executive Officer, would step down at the end of October 2019. HP also announced disappointing earnings results for the third quarter of fiscal year 2019, with Supplies revenue down 7% year-over-year. Management also revised Supplies revenue guidance even further down, to 4% or 5% down for fiscal year 2019 from previous guidance of 3%.
On October 3, 2019, HP Inc. announced that it was "departing from the purely transactional Supplies-centric business model" and transitioning to a hardware-driven business. The new business model gives customers the choice between a discounted HP printer that can only function with HP Supplies or a higher-priced HP printer with the option to choose third-party cartridges. Under the new business model, HP would abandon its use of the four-box model as HP de-emphasized Supplies revenue and instead would focus on "the key metrics [of] service growth and operating profit dollars, which better reflect[] the system profitability." HP also announced mass layoffs as part of a major company restructuring, in which it expects to cut between 7,000 to 9,000 positions, or up to 16% of its global workforce, over three years.

Shares of HP Inc. (NYSE: HPQ) declined from $27.08 per share in October 2018 to as low as $15.93 per share on October 10, 2019.

According to the complaint the plaintiff alleges on behalf of purchasers of HP Inc. (NYSE: HPQ) common shares between February 23, 2017 and October 3, 2019, that the defendants violated Federal Securities Laws. More specifically, the plaintiff claims that between February 23, 2017 and October 3, 2019, the defendants knew that the four-box model was severely deficient and not a strong predictor of Supplies demand and outcomes, because HP lacked telemetry data from its commercial printers and had to use unreliable and stagnant market share data to develop assumptions for the four-box model, that the defendants knew the lack of telemetry data for commercial printing was a critical shortcoming of the four-box model because HP possessed telemetry data on its personal printing side and knew it was a necessary element for an accurate understanding of the Supplies channel, and that as a result, the Supplies inventory in HP's channel exceeded demand by at least $100 million and HP's Supplies revenue growth was grossly inflated.