3 February 2010: The High Court orders HP to pay £200m in damages to BSkyB which has won its claim for fraudulent misrepresentation. A judge found that EDS, which was acquired by HP in 2008, had overstated its abilities when selling a CRM system to BSkyB. The £200m must be paid within 14 days.
17 February 2010: HP announces its first-quarter results.
1 March 2010: The judge in the case orders HP to pay a further £70m to BSkyB in interim damages and interest. There’s to be a further hearing in April over the amount of damages and interest.
5 March 2010: HP restates its first-quarter results in the light of the judge’s 1 March ruling. HP increases its contingency reserve in connection with the litigation, which hits its previously-announced first-quarter net profits by $73m [£48.3m]
As the amount of damages and interest have yet to be finalised, HP has told the US Securities and Exchange Commission that it will “continue to evaluate the reserve pending final resolution of the litigation”.
This is HP’s succinct summing up of the judge’s 468-page ruling:
“TheCourt’s March 1 order followed an earlier decision in January 2010 thatdismissed the majority of BSkyB’s claims against EDS but found thecompany liable in certain areas. HP is seeking permission to appeal thedecision.”
This was part of HP’s announcement:
“HPtoday stated that it has revised its previously-announced financialresults for its first fiscal quarter ended Jan. 31, 2010, followingdevelopments in litigation involving Electronic Data Systems (EDS), acompany that HP acquired in August 2008.
“The revisions reflect an increase in the amount of the contingencyreserve previously established in connection with the litigation andresulted in a negative impact on HP’s first quarter net earnings ofapproximately $73 million, or $0.03 per diluted share.
“EDS and one of EDS’s subsidiaries are defendants in litigation filedin the United Kingdom by Sky Subscribers Services Limited and BritishSky Broadcasting Limited (BSkyB) in 2004 relating to a customerrelationship management project that was awarded to EDS in 2000.
“At a court hearing held on March 1, 2010, the court ordered EDS tomake an interim payment to BSkyB of £70 million, or approximately $112million, which is in addition to an interim payment of £200 million, orapproximately $320 million, that HP made voluntarily to BSkyB inFebruary 2010.
“Following that March 1 hearing, HP determined that it was appropriateto increase the contingency reserve. HP will continue to evaluate thereserve pending final resolution of the litigation.
“The court’s March 1 order followed an earlier decision in January 2010that dismissed the majority of BSkyB’s claims against EDS but found thecompany liable in certain areas. HP is seeking permission to appeal thedecision.
“As these developments occurred after the end of HP’s first fiscalquarter and before the company had filed its financial statements aspart of its Quarterly Report on Form 10-Q, applicable accounting rulesrequired HP to update its financial results for that quarter to reflectthe impact of the increased contingency reserve.
“The updated financialresults do not reflect any other changes or adjustments to HP’spreviously announced first quarter financial results.
“As a result of the revisions, the company’s GAAP net earnings for thequarter has been revised to $2.25 billion and GAAP diluted earnings pershare (EPS) has been revised to $0.93 per share – down from GAAP netearnings of $2.32 billion and GAAP diluted EPS of $0.96 – as previouslyreported on Feb. 17, 2010…”
Beyond BSkyB, is HP dealing with other EDS litigation? – IT Projects Blog
Will the EDS/BSkyB case stop salespeople lying? – Inside Outsourcing
BSkyB ruling could push up price of IT contracts – ComputerWeekly.com