S&P Downgrades HP (HPQ) from A to BBB+; Outlook Stable
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Price: $28.13 +0.11%
Overall Analyst Rating:
NEUTRAL (
Up)
Dividend Yield: 3.6%
Revenue Growth %: -2.4%
Overall Analyst Rating:
NEUTRAL (
Up)Dividend Yield: 3.6%
Revenue Growth %: -2.4%
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Shares of Hewlett-Packard (NYSE: HPQ) are ticking very modestly lower in Wednesday's after-hours session as S&P downgraded the company's corporate credit and senior unsecured ratings from A to BBB+. The firm removed HP from CreditWatch; the outlook is Stable.
Standard & Poor's Ratings Services said today that it lowered its corporate credit and senior unsecured ratings on Palo Alto, Calif.-based Hewlett-Packard Co. (HP) to 'BBB+' from 'A', and removed them from CreditWatch, where they were placed with negative implications on Aug. 18, 2011. At the same time, we lowered our short-term rating on HP to 'A-2' from 'A-1'. The outlook is stable.
"The downgrade reflects liquidity and financial flexibility that have been reduced by more aggressive financial policies, including the use of leverage to fund the recent $10.2 billion (net) Autonomy acquisition," said Standard & Poor's credit analyst Martha Toll-Reed, "and annual share repurchases well in excess of discretionary cash flow." In addition, we have concerns that HP's inconsistent growth strategies and high levels of Board of Director and senior management turnover have elevated the level of operational and execution risk in the near term.
The stable outlook reflects our expectation that HP's operating trends and financial policies will sustain debt protection metrics near current levels.
We could lower the rating if debt to EBITDA is likely to exceed the low-2x area on a sustained basis because of weaker operations or incremental debt. A higher rating is unlikely for the near-to-intermediate term, based on current leverage levels, an ongoing emphasis on shareholder returns, and our expectation that continuing investments will be required to maintain competitiveness.
Standard & Poor's Ratings Services said today that it lowered its corporate credit and senior unsecured ratings on Palo Alto, Calif.-based Hewlett-Packard Co. (HP) to 'BBB+' from 'A', and removed them from CreditWatch, where they were placed with negative implications on Aug. 18, 2011. At the same time, we lowered our short-term rating on HP to 'A-2' from 'A-1'. The outlook is stable.
"The downgrade reflects liquidity and financial flexibility that have been reduced by more aggressive financial policies, including the use of leverage to fund the recent $10.2 billion (net) Autonomy acquisition," said Standard & Poor's credit analyst Martha Toll-Reed, "and annual share repurchases well in excess of discretionary cash flow." In addition, we have concerns that HP's inconsistent growth strategies and high levels of Board of Director and senior management turnover have elevated the level of operational and execution risk in the near term.
The stable outlook reflects our expectation that HP's operating trends and financial policies will sustain debt protection metrics near current levels.
We could lower the rating if debt to EBITDA is likely to exceed the low-2x area on a sustained basis because of weaker operations or incremental debt. A higher rating is unlikely for the near-to-intermediate term, based on current leverage levels, an ongoing emphasis on shareholder returns, and our expectation that continuing investments will be required to maintain competitiveness.
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