Compaq Settles Four-Year-Old Lawsuit Over Accounting

The agreement with Houston-based Compaq, which was recently acquired by Palo Alto, Calif.-based Hewlett-Packard, was reached after about a three-month mediation process, says Thomas Bilek, the lead plaintiff's attorney.

"I think this is the most we can get at this time," Bilek told the Houston Chronicle for its Wednesday editions. "If we continued to litigate, there were risks of recovering nothing--substantial risks."

The lawsuit, filed in 1998, alleged that Compaq failed to disclose that its reported growth in sales and earnings was actually the result of its practice of borrowing sales from future quarters. The suit also accused executives there of using their knowledge of these problems to sell shares at inflated prices.

Compaq's attorney, John L. Carter, says the settlement agreement is not an admission of guilt.

"It's a way in which they can resolve the issue at this time on a basis they regard as satisfactory," Carter says.

The proposed settlement will be split among investors who bought stock between July 10, 1997, and March 6, 1998.

Bilek says the formula for the settlement was determined based upon losses investors had as a result of the purchase of the stock.

The settlement requires approval by a federal judge; a hearing is set for November.

Investors may decline the settlement offer or they can also exclude themselves from the settlement and seek their own claims against Compaq.

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