Adaptec credit outlook worsens

Standard and Poor’s has marked down Adaptec’s credit rating from “stable” to “negative outlook”. The credit agency concluded that sustained weak margins or diminished financial flexibility could lead to lower ratings next year. Adaptec says that the change in outlook is due to challenges inherent in its business realignment programme and the tough competition in the market. The company's corporate credit rating stayed at a double B plus, and its debt rating held on to its double B minus. This shows financial flexible finances offset by a narrow business base, according to Adaptec. Adaptec has the largest market share for SCSI chips and adapter cards, but says sales have been hit by a shift to cheaper PCs, and the squeeze on margins at the higher end of the market. LSI Logic's acquisition of Symbios also increases the levels of competition in the market. The company says it will be more cautious in its approach to growth and will focus on its core businesses and well-established markets. Meanwhile, a number of senior managers have left the company. ®