Hewlett-Packard Co. said it has reached a settlement with the U.S. Department of Justice to resolve an investigation into alleged kickbacks paid by technology companies on government contracts.
H-P said the settlement will reduce earnings in its fiscal third quarter by about two cents a share, which is equal to about $50 million.
The settlement resolves a Justice Department investigation into an H-P contract with the General Services Administration as well as a separate civil suit filed in 2007 by the agency in federal court in Arkansas.
"H-P denies engaging in any illegal conduct in connection with these matters," a spokeswoman for the Palo Alto, Calif., company said. "We believe it is in the best interest of our stakeholders to resolve the matter and move beyond this issue."
A spokesman for the Department of Justice declined to comment.
The litigation against H-P and other technology companies sprang from so-called whistle-blower suits that were filed by a former employee of computer outsourcing and consulting firm Accenture PLC. The suits contended that most computer-industry players regularly violated the Anti-Kickback Act of 1986 by forming marketing partnerships involving what some companies called "influencer fees" or "referral fees"—payments or discounts that passed between the companies doing business together on federal contracts but weren't revealed to the government.
The technology companies had argued that the payments at issue were common rebate and discount programs widely used in their industry and others.
The suits were filed in 2004, but sealed until April 2007, when the Department of Justice agreed to joint the cases.
Some other companies have settled the allegations.
Data storage equipment maker EMC Corp., for example, agreed in May to pay $87.5 million to settle similar charges.
In May, H-P had estimated earnings for its third quarter, which ended Saturday, of $1.05 to $1.07 a share, excluding items.
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