Black week for HP as troubles mount

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Black week for HP as troubles mount

HP's public image suffered several blows across the globe this week, with an intellectual property lawsuit against Asian print companies, strikes at its EDS division in England, and lower than expected first quarter earnings after a large payout to BSkyB.

The troubled vendor is taking three Asian companies to court alleging infringement of its ink cartridge patents and physical theft of print head components.

HP will not comment on the lawsuit, but documents have been filed with the US District Court in San Francisco under the case name Hewlett Packard v MicroJet Technology, 10-00965.

The patent allegations are against Taiwan-based Microjet Technology and Hong Kong-based PTC Holdings. Another company, Mipo Technology, is accused of stealing HP print head components from a manufacturing base in Singapore and selling them on as its own products.

Meanwhile, workers at HP's EDS unit in the north of England have been on strike since yesterday to campaign for better job security and pay. The strike has been organised by the Public and Commercial Services (PCS) union.

"Many former EDS employees are deeply unhappy at the way they are being treated by the new employers," said a report on the PCS web site.

HP bought EDS for US$13.9bn in 2008 to become a major force in the IT services market. However, analysts warned at the time that the acquisition was likely to cause problems because the companies had such different cultures and histories.

EDS staff suffered rounds of wage cuts last year, and HP began considering cuts to its outsourcing services.

HP and PCS have tried to reach an agreement since the beginning of this year. Terms were agreed a few weeks ago with the help of ACAS, but were subsequently rejected by the union's membership.

HP said that some non-urgent work had been reduced to cope with the strike action.

"We will continue to maintain a dialogue with the union in an attempt to avoid any further form of action," the company said in a statement.

Finally, a court hearing at the beginning of this month ordered HP to pay £70m (A$114m) in compensation to BSkyB after a bungled customer relationship project awarded to EDS in 2000.

HP has since had to revise its financial forecasts for the first quarter of this year, lowering its net income from US$2.32bn (A$2.53bn) to US$2.25bn ($A2.46bn).

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