Wall Street Beat: Tech treads water as confidence wanes

Server revenue is weak as HP gets hit with lawsuits related to the Autonomy acquisition

By , IDG News Service |  IT Management

"It was shocking that HP put non-specific but highly damaging allegations into the public domain without prior notification or contact with me, as former CEO of Autonomy," he wrote. "I utterly reject all allegations of impropriety. "

Meanwhile several lawsuits have been filed against HP and its auditors in the U.S. District Court for the Northern District of California. One lawsuit, brought by Allan Nicolow seeking class action status for shareholders, charges that HP officials "issued materially false and misleading statements regarding Hewlett-Packard's financial performance, business prospects and the status of its operating segments."

An HP spokesman said Friday that the company is reviewing the allegations, but declined to comment further.

HP shares were trading at $12.95 Friday afternoon, below the $13.30 level they closed at before the write-down announcement.

In one of the few scraps of good news for tech this week, e-commerce appeared to have been given a boost on Cyber Monday, the day after the U.S. Thanksgiving holiday weekend. The Adobe Digital Index said that online sales totaled about $1.98 billion, a 17 percent jump over Cyber Monday sales in 2011.

But it will take more than a few days of strong online sales to boost IT. Confidence in IT, as measured by investor sentiment, continues to be weak. The Nasdaq Computer Index was down by 5.26 points to 1,557.53 in Friday afternoon trading. Though computer company stocks on the tech-heavy Nasdaq are still about 13 percent above what they were at the start of the year, they are well below their level at the end of the third quarter.

At the end of the third quarter, Nasdaq tech stocks were up by about 25 percent over their level at the beginning of the year. During the third quarter, the U.S. Federal Reserve announced it would launch the "QE3," a third round of "quantitative easing," buying mortgage bonds and possibly other assets until the unemployment picture looks better. For its part, the European Central Bank revealed details of a plan to use a stability fund to buy up short-term European debt.

But since then, the reality of weak tech earnings reports as well as worries about the fiscal cliff, has put a damper on the enthusiasm generated by the banks' actions.

The fiscal cliff is a series of government spending cuts and tax hikes set to kick in next year if a budget compromise is not reached.

"There is a stalemate; let's not kid ourselves," said U.S. House of Representatives Speaker John Boehner, a Republican from Ohio, speaking on Friday to reporters, a day after President Barack Obama made a budget offer. The big issue is whether to extend low tax rates on household income above $250,000, with Boehner saying that Republicans oppose raising tax rates.

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