1. Product Recall What  Lithium-Ion batteries used in Hewlett-Packard and Compaq notebook computers When  May 14, 2009 Units Recalled  About 70,000 Why  The recalled lithium-ion batteries can overheat, posing a fire and burn hazard to consumers. Source http://www.cpsc.gov/cpscpub/prerel/prhtml09/09221.html ETM591_KendrickDeLaine

2. Management Issues Recognition of Problem:  HP expanded a worldwide voluntary recall and replacement program in cooperation with various government agencies, adding battery packs to the replacement program announced on May 14, 2009 Speed of Response:  The computers were sold at c omputer and electronics stores nationwide, hp.com and hpshopping.com from August 2007 through March 2008 Responsibility:  HP took responsibility for the recall and apologize for any inconvenience it may have caused. HP released this statement: “ We are taking this action as part of our commitment to provide the highest quality of service to our notebook customers. We are proactively notifying you of this issue and are prepared to replace all verified battery packs.” ETM591_KendrickDeLaine

3. Impact Of Recall Legal Consequences:  Little was found about any legal consequences stemming from this recall. Reputation:  HP reputation took damage. A year later HP recalled an additional 54k battery units. Sales:  Revenue from desktop computers fell 24% while laptop revenue fell 13%. Operating profit for the group was $374 billion -- down from $544 billion last year (2008). ETM591_KendrickDeLaine

4. References http://www.marketwatch.com/story/h-p-shares-down-following-earnings- decline http://www.marketwatch.com/story/h-p-shares-down-following-earnings- decline http://bpr.hpordercenter.com/hbpr/pdf/m14/customer%20letter-en-us.pdf http://www.engadget.com/2010/05/20/hp-expands-laptop-battery-recall- again/ http://www.engadget.com/2010/05/20/hp-expands-laptop-battery-recall- again/ http://www.cpsc.gov/cpscpub/prerel/prhtml10/10240.html http://www.cpsc.gov/cpscpub/prerel/prhtml09/09221.html ETM591_KendrickDeLaine