PC makers await suits in Toshiba defects case

PC makers await suits in Toshiba defects case

Toshiba's decision to settle the lawsuit charging it with selling defective laptop computers has reportedly propelled the plaintiffs to file similar suits against other PC makers.

The Texas plaintiffs' lawyers filed separate suits against Compaq, Hewlett-Packard, NEC, Packard Bell NEC, and eMachines, according to a story in last Tuesday's Wall Street Journal.

Toshiba recently announced a $US1 billion settlement fund related to a lawsuit filed in Texas under the names of Thurmond and Lapray, who charged the computer maker with selling laptops with flawed floppy disk controllers. A report on last week's Dow Jones newswire valued Toshiba's settlement at $US2.1 billion and said that more than five million Toshiba laptops will be affected.

Observers were not surprised that Toshiba's decision to settle was followed by additional suits.

"As soon as Toshiba responded in this manner, it basically gave this group in Texas the ammunition they needed to go after whoever they want," said Tim Bajarin, an analyst with Creative Strategies.

The Australian arms of the companies defending the accusation claim never to have experienced any troubles with floppy disk controllers.

According to Farley Bartholomeusz, chief executive officer of Packard Bell NEC: "There have been absolutely no problems with the products here." He did admit to there being the occasional faulty product but no inherent design or manufacturing flaws.

Flamboyant denial

Compaq was more flamboyant in its denial, claiming in a statement that "the complaint filed against Compaq appears to be a copycat suit filed in an attempt to exploit the recent settlement by Toshiba. The issues raised in the suit dealt with microcode problems specific to Toshiba laptop computers."

Analysts said that, unlike Toshiba, the other companies would probably vigorously fight any similar charges. Toshiba elected to settle without admitting wrongdoing, figuring to cut its losses and move on, but the other companies are in a different place, they said.

Mindful of its loss of market share in the past couple of years, Toshiba probably wanted to signal to customers that it would stand by its products, said Bajarin. "They did not fight it in the same way that I think a Compaq or a Dell will fight it."

Bruce Stephen, an analyst with IDC, agreed. In Compaq's case, the company is probably on the defensive, given its recent executive changes as well as lingering questions over its purchase of Digital, Stephen said. Compaq will probably opt to "come out punching rather than take another hit", he said.

A Compaq representative confirmed that the PC giant will fight the charges. "We're confident that our products don't have a problem like that outlined in the complaint," said Alan Hodel, a company spokesman.

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