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HP slumps on Autonomy charge as Wall Street, FTSE 100 stumble

Last updated: 01:02 21 Nov 2012 AEDT, First published: 02:02 21 Nov 2012 AEDT

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--updates after Wall Street opening bell--

US computer giant Hewlett-Packard (NYSE:HPQ) was the talk of Wall Street as it dropped as much as 13%, which put a damper on yesterday’s big gains.

The company today took a huge write-down at recent UK acquisition Autonomy and accused previous management of fraudulent accounting and a “wilful effort” to mislead investors and potential buyers.

HP took a US$8.8bn charge related to software group Autonomy in its latest quarterly figures, which tipped in it into a loss of US$6.9bn.

In a statement the US firm added: “HP is extremely disappointed to find that some former members of Autonomy’s management team used accounting improprieties, misrepresentations and disclosure failures to inflate the underlying financial metrics of the company, prior to Autonomy’s acquisition by HP.

“These efforts appear to have been a wilful effort to mislead investors and potential buyers, and severely impacted HP management’s ability to fairly value Autonomy at the time of the deal.”

Hewlett paid US$10.2 bln for Cambridge-based Autonomy in 2011 but has written off almost 90% of that price in a little over a year.

Benchmark index the Dow Jones Industrial Average lost 50 points or 0.4% to stand at 12,745, while S&P 500 stocks lost 4 points or 0.3%, taking it to 1,383.

Tech stocks tracked HP south, with chipmaker Intel (NASDAQ:INTC) down 3%, Cisco Systems (NASDAQ:CSCO) slipping 1.2% and Microsoft (NASDAQ:MSFT) losing 0.8%.

UK Markets

The Footsie lost some of its pizazz today as investors mulled over France's downgrade by ratings giant Moody's.

The FTSE 100 was down 12.5 points or 0.2% to stand at 5,726 after yesterday’s big rally.

Fears in the eurozone appear to be impossible to keep from the door, with the ratings agency Moody's yesterday stripping France of its gold-plated triple 'A' rating and putting it to negative outlook.

Chip developer ARM Holdings (LON:ARM) topped the loser board and its shares fell 1.93% to stand at 732.50 pence after it was once again rated "neutral" by analysts at Exane BNP Paribas in a note.

Banking giant RBS (LON:RBS) was also out of favour after its shares fell 1.64% to stand at 282.6 pence.

The biggest riser on the blue chip exchange was InterContinental Hotels Group (LON:IHG) whose shares climbed 2.26%, to stand at 1,626 pence.

The group has unveiled its latest brand - Holiday Inn Express. It is a joint venture and the firm plans to build 18 more properties under the brand by 2016.

Mike van Dulken, of Accendo Markets, noted that yesterday's bounce by the FTSE 100 had been bigger than expected, in fact, one of the biggest daily gains for a while.

“However, resistance at 5,740 has kept a 9-day trend of falling highs, helped by Moody’s French downgrade and tempered optimism towards the Eurogroup meeting today,” he said.

“Greece might get its money but it might also have to wait another month. Thankfully we’re now used to waiting. Any downside, however, may find a hurdle at round number 5,700, leading to a renewed narrow trading range.”

In other corporate news, food giant Premier Foods (LON:PFD) gained 2.44% despite revealing it was closing two bakery sites - with the loss of 900 jobs.

Elsewhere, High flying easyJet (LON:EZJ) wowed the City with a 28% rise in annual profits and more than doubled the annual dividend. Shares rose 5.67%, to change hands at 689.5p.

Meanwhile, home repairs firm Homeserve (LON:HSV) shares were up 4.39%, to 23.8p after it said its UK business was putting its troublesome past behind it.

Although customer numbers in the UK at the end of September were down to 2.5mn from 3mn a year earlier, group revenue in the six months to the end of September was up 8% to £229.6mn from £213.1mn the year before.

In the small caps, New World Oil & Gas (LON:NEW) said drilling on its first Belize well confirmed the prospect lies in a working hydrocarbon system and shares rose 2.74% to stand at 9.38p.

Among other risers were Gulf Keystone Petroleum (LON:GKP), up 1.27% and Advanced Computer Software (LON:ASW), up 1.21% at 0.75p.

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