HP’s Accounting Claims Are Seen as Cover for Bad Deals - (www.bloomberg.com) Hewlett-Packard Co.’s (HPQ) claims of financial improprieties at Autonomy Corp. have accounting experts questioning whether the allegations are an attempt to divert attention from yet another bad acquisition. Hewlett-Packard said yesterday it recorded an $8.8 billion writedown related to its purchase last year of Autonomy, the U.K. software maker. More than $5 billion of that impairment charge was the result of accounting practices at Autonomy, Hewlett-Packard said in a statement. About $200 million of Autonomy’s revenue had been recorded prematurely or improperly, according to Hewlett-Packard’s general counsel. “How does that translate into a $5 billion write-off?” said Lynn E. Turner, former chief accountant of the U.S. Securities and Exchange Commission and a managing director at LitiNomics Inc., an economic and forensic consulting firm. “The big issue isn’t the fraud they’re talking about. The big issue is that HP has made acquisitions that have turned out to be a disaster.”
Drought No Obstacle to Record Income for U.S. Farms - (www.bloomberg.com) Even after the worst drought in a half century shriveled crops from Ohio to Nebraska, U.S. farmers are having their most-profitable year ever because of record- high prices and insurance claims. Farmer income probably will jump 6.9 percent to $144 billion, exceeding the government’s August estimate of $139.3 billion, said Neil Harl, an economist at Iowa State University. Parched fields that drove corn, soybean and wheat futures as much as 68 percent higher since mid-June mean insurance payouts may more than double to $28 billion, according to Doane Advisory Services Co., a farm and food-company researcher in St. Louis.
Meat Firms Face Hit to Plump Profits - (online.wsj.com) Most big U.S. meat companies have posted solid profits this year, though some have experienced an earnings slowdown as consumers balk at higher prices for steak and other meat products. Now the companies are just starting to face a new challenge: a severe U.S. drought that has driven up the cost of grains they use to fatten cattle, hogs and chickens. Investors looking for clues into how the higher costs will affect the meat giants will get a taste this week, when Tyson Foods Inc. and Hormel Foods Corp. report quarterly results.
Los Angeles Set to Rival Chicago With Highest Sales Levy - (www.bloomberg.com) Los Angeles shoppers looking for just the right satin blindfold or Whip Me stockings at Agent Provocateur’s lingerie boutique on Melrose Avenue may soon pay as much tax as customers at the company’s Gold Coast store in Chicago, and more than at the one on Madison Avenue. The City Council, which faced $1.6 billion in deficits over the past four years, voted 11-4 today to ask residents to boost the local sales tax 0.5 percentage point, bringing the total levy -- local and state -- to 9.5 percent. That would tie Los Angeles with Chicago for the highest rate of the 10 largest U.S. cities. New York City is 8.875 percent. “Our approach to dealing with our budget shortfalls has been to cut,” said Edward Johnson, a spokesman for City Council President Herb Wesson, who backed the sales tax proposal. “If we continue to cut, we will drastically affect the services that we deliver to our citizens.”
Catalan Banks Owing ECB $77 Billion May Stall Independence Drive - (www.bloomberg.com) Catalan bank borrowings of about 60 billion euros ($77 billion) from the European Central Bank may prove an obstacle on the region’s path to possible independence.
CaixaBank SA, Spain’s third-biggest bank, took about 20 billion euros in central bank funding, according to the Barcelona-based company’s accounts. Banco Sabadell SA, a Catalan lender that became Spain’s fifth-biggest after a string of acquisitions, has borrowed about 27 billion euros. The region’s President Artur Mas called early elections for Nov. 25 in a gambit that may trigger a drive for independence and risks stranding a new Catalan state outside the European Union as well as severing ties to Spain. The region’s banks, like other Spanish lenders, tapped the ECB’s low-cost funding when Spain’s economic crisis shut them out of debt markets.