Controversies

Restatementedit

In March 2003, HP restated its first-quarter cash flow from operations, reducing it 18 percent because of an accounting error. Actual cash flow from operations was $647 million, not $791 million as reported earlier. HP shifted $144 million to net cash used in investing activities.

Spying scandaledit

On September 5, 2006, Shawn Cabalfin and David O'Neil of Newsweek wrote that HP's general counsel, at the behest of chairwoman Patricia Dunn, contracted a team of independent security experts to investigate board members and several journalists in order to identify the source of an information leak. In turn, those security experts recruited private investigators who used a spying technique known as pretexting. The pretexting involved investigators impersonating HP board members and nine journalists (including reporters for CNET, The New York Times and The Wall Street Journal) in order to obtain their phone records. The information leaked related to HP's long-term strategy and was published as part of a CNET article in January 2006. Most HP employees accused of criminal acts have since been acquitted.

Hardwareedit

In November 2007, Hewlett-Packard released a BIOS update covering a wide range of laptops with the intent to speed up the computer fan as well as have it run constantly, whether the computer was on or off. The reason was to prevent the overheating of defective Nvidia graphics processing units (GPUs) that had been shipped to many of the original equipment manufacturers, including Hewlett-Packard, Dell, and Apple. The defect concerned the new packaging material used by Nvidia from 2007 onwards in joining the graphics chip onto the motherboard, which did not perform well under thermal cycling and was prone to develop stress cracks – effectively severing the connection between the GPU and the motherboard, leading to a blank screen. In July 2008, HP issued an extension to the initial one-year warranty to replace the motherboards of selected models. However this option was not extended to all models with the defective Nvidia chipsets despite research showing that these computers were also affected by the fault. Furthermore, the replacement of the motherboard was a temporary fix, since the fault was inherent in all units of the affected models from the point of manufacture, including the replacement motherboards offered by HP as a free 'repair'. Since this point, several websites have been documenting the issue, most notably www.hplies.com, a forum dedicated to what they refer to as Hewlett-Packard's "multi-million dollar cover up" of the issue, and www.nvidiadefect.com, which details the specifics of the fault and offers advice to the owners of affected computers. There have been several small-claims lawsuits filed in several states, as well as suits filed in other countries. Hewlett-Packard also faced a class-action lawsuit in 2009 over its i7 processor computers. The complainants stated that their systems locked up within 30 minutes of powering on, consistently. Even after being replaced with newer i7 systems, the lockups continued.

Lawsuit against Oracleedit

On June 15, 2011, HP filed a lawsuit in California Superior Court in Santa Clara, claiming that Oracle Corporation had breached an agreement to support the Itanium microprocessor used in HP's high-end enterprise servers. On June 15, 2011, HP sent a "formal legal demand" letter to Oracle in an attempt to force the world's No. 3 software maker to reverse its decision to discontinue software development on Intel Itanium microprocessor and build its own servers. HP won the lawsuit in 2012, requiring Oracle to continue to produce software compatible with the Itanium processor. HP was awarded $3 billion in damages against Oracle on June 30, 2016. HP argued Oracle's canceling support damaged HP Itanium server brand. Oracle has announced it will appeal both the decision and damages.

Takeover of Autonomyedit

In November 2012, HP recorded a writedown of around $8.8 billion related to its acquisition a year earlier of the UK based Autonomy Corporation PLC. HP accused Autonomy of deliberately inflating the value of the company prior to its takeover. The former management team of Autonomy flatly rejected the charge.

At the time, HP had fired its previous CEO for expenses irregularities a year before, and appointed Léo Apotheker as CEO and President. HP was seen as problematic by the market, with margins falling and having failed to redirect and establish itself in major new markets such as cloud and mobile services. Apotheker's strategy was to aim at disposing of hardware and moving into the more profitable software services sector.

As part of this strategy, Autonomy was acquired by HP in October 2011. HP paid $10.3 billion for 87.3% of the shares, valuing Autonomy at around $11.7 billion (£7.4 billion) overall, a premium of around 79% over market price. The deal was widely criticized as "absurdly high", a "botched strategy shift" and a "chaotic" attempt to rapidly reposition HP and enhance earnings, and had been objected to even by HP's own CFO.:3–6 Within a year, Apotheker himself had been fired, major culture clashes became apparent and HP had written off $8.8 billion of Autonomy's value.

HP claim this resulted from "accounting improprieties, misrepresentations and disclosure failures" by the previous management, who in turn accuse HP of a "textbook example of defensive stalling":6 to conceal evidence of its own prior knowledge and gross mismanagement and undermining of the company, noting public awareness since 2009 of its financial reporting issues:3 and that even HP's CFO disagreed with the price paid.:3–6 External observers generally state that only a small part of the write-off appears to be due to accounting mis-statements, and that HP had overpaid for businesses previously.

The Serious Fraud Office (United Kingdom), and the U.S. Securities and Exchange Commission joined the FBI in investigating the potential anomalies. HP incurred much damage with its stock falling to decades' low. Three lawsuits were brought by shareholders against HP, for the fall in value of HP shares. In August 2014 a United States district court judge threw out a proposed settlement, which Autonomy's previous management had argued would be collusive and intended to divert scrutiny of HP's own responsibility and knowledge, by essentially engaging the plaintiff's attorneys from the existing cases and redirecting them against the previous Autonomy vendors and management, for a fee of up to $48 million, with plaintiffs agreeing to end any claims against HP's management and similarly redirect those claims against the previous Autonomy vendors and management. In January 2015 the SFO closed its investigation as the likelihood of a successful prosecution was low. The dispute is still being litigated in the US, and is being investigated by the UK and Ireland Financial Reporting Council. On June 9, 2015, HP agreed to pay $100 million to investors who bought HP shares between August 19, 2011, and November 20, 2012 to settle the suite over Autonomy purchase.

Another term of the shareholder settlement was to sue Autonomy management. This trial took place in London in 2019. In a trial that lasted 93 days with 58 witnesses, HP "failed to produce a smoking gun for the fraud it alleges." HP's own accountants admitted that they "never formally prepared anything to attribute the irregularities to the amount of the fraud."

Israeli settlementsedit

On October 25, 2012, Richard Falk, the Human Rights Council's Special Rapporteur on the situation of human rights in the Palestinian territories occupied since 1967, called for boycotting HP together with other "businesses that are profiting from Israeli settlements on occupied Palestinian lands until they brought their operations in line with international human rights and humanitarian law". In 2014, the Presbyterian Church voted to move forward with divestment from HP to pressure Israeli in regards to their policies toward Palestinians. In 2015, the City of Portland's Human Rights Commission requested to place Caterpillar, G4S, Hewlett-Packard, and Motorola Solutions on the city's "Do Not Buy" list.

Briberyedit

On April 9, 2014, an administrative proceeding before Securities and Exchange Commission was settled by HP consenting to an order acknowledging that HP had violated the Foreign Corrupt Practices Act (FCPA) when HP subsidiaries in Russia, Poland, and Mexico made improper payments to government officials to obtain or retain lucrative public contracts.

The SEC's order finds that HP's subsidiary in Russia paid more than $2 million through agents and various shell companies to a Russian government official to retain a multimillion-dollar contract with the federal prosecutor's office. In Poland, HP's subsidiary provided gifts and cash bribes worth more than $600,000 to a Polish government official to obtain contracts with the national police agency. And as part of its bid to win a software sale to Mexico's state-owned petroleum company, HP's subsidiary in Mexico paid more than $1 million in inflated commissions to a consultant with close ties to company officials, and money was funneled to one of those officials. HP agreed to pay $108 million to settle the SEC charges and a parallel criminal case.