Regions: Financial Winner
The broad indexes ended mixed, after Federal Reserve Chairman Ben Bernanke warned about the "fiscal cliff," which is the set of tax increases and federal spending cuts mandated for 2013 under the August 2011 deal between President Obama and the Republican leadership of the House of Representatives, without further action from the President and Congress.
Speaking at the New York Economic Club, Bernanke warned that "the automatic tax increases and spending cuts that make up the fiscal cliff, absent offsetting changes, would pose a substantial threat to the recovery--indeed, by the reckoning of the Congressional Budget Office (CBO) and that of many outside observers, a fiscal shock of that size would send the economy toppling back into recession." Bernanke also said that early next year "it will be necessary to approve an increase in the federal debt limit to avoid any possibility of a catastrophic default on the nation's Treasury securities and other obligations."
The Dow Jones Industrial Average (^DJI) was dragged into the red by Hewlett-Packard (HPQ) , with shares dropping 12% to close at $11.71, after the computer hardware giant reported a net loss of $6.9 billion, or $3.49 a share for its fiscal fourth quarter ended Oct. 31, which included an $8.8 billion write-down of goodwill, related to former H-P CEO Leo Apotheker's disastrous decision in August 2011 to purchase Autonomy for $11 billion.
After taking over as CEO in in September 2010, Apotheker oversaw saw HP's launch of its new TouchPad, which featured WebOS, the operating system acquired by HP in July 2010, as part of its acquisition of Palm. After launching the TouchPad on July 1, 2011, HP just seven weeks later on Aug. 18, 2011 announced that HP would cancel the TouchPad and all other WebOS products, including smart phones, while considering a spin-off of the company's core PC business, in order to "sharpen HP's focus on its strategic priorities of cloud, solutions and software with an emphasis on enterprise, commercial and government markets."
That new focus for the company included the expensive acquisition of Autonomy.
Apotheker was dismissed one month later on Sept. 22, 2011, with Meg Whitman taking over as new CEO. After a complete review of HP's businesses and strategy, Whitman and the board of directors decided not to spin-off the PC business, underscoring just how dysfunctional the company's board was, before Whitman took over. HP announced the completion of the Autonomy acquisition on Oct. 3, 2011.
HP on Tuesday said that most of the $8.8 billion "impairment charge is linked to serious accounting improprieties, disclosure failures and outright misrepresentations at Autonomy Corporation plc that occurred prior to HP's acquisition of Autonomy and the associated impact of those improprieties, failures and misrepresentations on the expected future financial performance of the Autonomy business over the long-term," and that "the balance of the impairment charge is linked to the recent trading value of HP stock."