* This post was updated to reflect late developments in the trial.
The Fast Money traders suggest keeping a close eye on Hewlett Packard which reports earnings after the close Monday.
The stock is down almost 20% this year in the wake of Mark Hurd's departure and its bidding way for 3PAR. However another drama is looming over the company - one which threatens to bump earnings right out of the spotlight.
What Happened Now?
HP's new CEO, Leo Apotheker, has become a lighning rod for controversy since starting his job early November.
First the Street questioned Apotheker's track record after former employer SAP decided not to renew his contract when it expired some months ago.
Now, Apotheker has become ensared in a lawsuit filed by Oracle .
CEO Larry Ellison claims Apotheker was a key player in an "industrial espionage scheme" centered on stealing Oracle's software while Apotheker was working for SAP.
As you might imagine the situation has been acrimonious to say the least.
At one point, Oracle attorney David Boies threatened to track down Apothekar and force him to testify - however, HP refused to accept the subpoena on Apotheker's behalf.
In turn HP accused Oracle of harassing Apotheker.
As long as Apotheker didn't come within 100 miles of the Oakland federal courthouse while the trial was underway, Oracle couldn't compel him to testify.
From Bad To Worse
As bad as that sounds - it got worse.
Subsequently, Oracle threatened to play a videotaped deposition of Apotheker during their rebuttal case, which wrapped up Friday, if they were unable to serve him with a subpoena.
But they didn't - with attorney's saying Oracle had already proved Apotheker oversaw the scheme. Asked outside the courtroom why he did not play the deposition, Boies told reporters that it was two years old and "really didn't add anything."
HP reiterated its position that Apotheker had a "limited role in the matter." "Oracle's current stance is clear proof that they have been trying to harass Leo and interfere with his work at HP," a Friday statement read.
"Oracle had ample opportunity to question Leo in the two years after he gave a full-day deposition. Leo was never asked to give an additional deposition."
How should you position? What’s the trade?
I’m growing concerned that earnings will take a back seat to the company's management turmoil, says Joe Terranova. I had been bullish on the stock in the wake of Dell earnings -- but now I’m rethinking that. Instead, I’d step to the sidelines and let these developments play out.
Of course these developments could slap the stock but fundamentally I like HP long-term, counters Steve Grasso. I think the lawsuit is a lot of collateral noise. Look at the fundamentals – I’d sniff around at these levels.
What do you think? We want to know!
