Hewlett-Packard (HPQ) Credit Rating Cut to Baa1 at Moody's, Outlook Negative

November 28, 2012 3:35 PM EST
Moody's Investors Service lowered the long term credit ratings of Hewlett-Packard (NYSE: HPQ), including the senior unsecured rating to Baa1 from A3. The Prime-2 short term rating is affirmed. This concludes a review initiated October 4, 2012. The outlook is negative.

The new rating reflect our expectations that "although HP will maintain strong to leading positions in a number of product areas, the company's credit profile will remain weaker than previously expected over the intermediate term," said Moody's senior vice president, Richard Lane.

The negative rating outlook reflects our concerns about HP's ability to contend with the significant competitive, secular and execution challenges facing the company. A "broad portion of HP's portfolio, including PC's, some enterprise servers, printers, and services, representing over 75% of revenue, will face slow to no growth prospects over the coming years," said Lane. The ability to restore growth and profitability has sufficient uncertainty that we believe event risk in the form of more shareholder friendly actions or portfolio repositioning could develop, which would pressure the company's credit ratings.

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