US futures reverse course as HP takes $8.8B hit

AP News
Posted: Nov 20, 2012 8:50 AM
US futures reverse course as HP takes $8.8B hit

NEW YORK (AP) — Stock futures grew choppy Tuesday after Hewlett-Packard revealed that it was the victim of a massive fraud related to an acquisition and took a huge hit to its latest quarterly earnings.

After a mostly positive morning, the Dow Jones industrial futures fell 18 points to 12,720. The broader S&P futures slipped 0.50 points to 1,382. Nasdaq futures added 1.5 points to 2,587.

Hewlett-Packard said Tuesday that a British company it bought for $10 billion last year lied about its finances and accusing Autonomy Corporation PLC, of "serious accounting improprieties, disclosure failures and outright misrepresentations." It took an $8.8 billion charge against its earnings, mostly due to the Autonomy deal.

HP shares dropped $1.45, or 10.9 percent, to $11.85 in premarket trading. If the shares stay at that level in regular trading, they will set a 10-year low.

HP's net loss for the fiscal fourth quarter, which ended Oct. 31, amounted to $6.85 billion, or $3.49 per share. That compares with net income of $239 million, or 12 cents per share, in the same period last year.

Futures regained some of their losses from the Hewlett-Packard news on a positive housing report from the Commerce Department.

U.S. builders started construction last month on the most single-family homes and apartments since July 2008, suggesting that a recovery in the housing sector is taking hold.

Housing starts jumped 3.6 percent in October from September to a seasonally adjusted annual rate of 894,000. Single-family home construction dipped 0.2 percent.