HP boosts contingency reserve after latest BSkyB damages order

Three weeks after HP announced its first quarter results, the supplier is restating its figures, after a judge awarded increased damages and interest in...

Three weeks after HP announced its first quarter results, the supplier is restating its figures, after a judge awarded increased damages and interest in the company's litigation with BSkyB.

When HP announced its first quarter results on 17 February 2010, it had already paid BSkyB £200m in interim damages.

But about two weeks after HP announced its results, on 1 March 2010, the judge in the legal action ordered HP to make a further interim payment to BSkyB of £73m in damages and interest, less £3m to take account of tax.

HP says the judge's order has had a "negative impact" on its previously announced first quarter net profits by about $73m (£48.14m).

"Following that 1 March hearing, HP determined that it was appropriate to increase the contingency reserve," said HP in a statement to US regulators, the Securities and Exchange Commission.

The revision reduces HP's previously announced net profits for the quarter from $2.32bn to $2.25bn.

The litigation between BSkyB and HP relates to a CRM project that Sky ordered from EDS in 2000.

HP says the UK court "dismissed the majority of BSkyB's claims against EDS but found the company liable in certain areas". HP is seeking permission to appeal.

BSkyB had claimed £700m from EDS - which was acquired by HP in August 2008 - so the judge may award further damages and interest at later hearings. HP says it will "continue to evaluate the reserve pending final resolution of the litigation".

Last month, Computer Weekly reported that HP's corporate leaders gave no answer when questioned by an analyst on whether they are facing possible damages from other litigation relating to services supplier EDS before HP took it over in 2008.

Under the rules of the US Securities and Exchange Commission, it is likely that HP would have to declare the existence of any major litigation that pre-dated HP's acquisition of EDS. It is unclear, though, whether HP is facing any other litigation from before the acquisition.

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