Feeds

HP hit with a Moody...

Agency cuts rating

  • alert
  • submit to reddit

Secure remote control for conventional and virtual desktops

Credit agency Moody's is cutting its rating outlook for Hewlett-Packard from positive to stable. The analysts are worried about HP's longer-term performance and the increasing risk of competition.

Moody's says HP's performance in the enterprise market is: "below expectations, inconsistent and subject to strong competitive and secular trend pressures". The agency complains that HP's cost structure is too high and customers are more interested in lower margin products like x86 servers. HP recently said it wanted to acheive enterprise margins of four per cent in 2005, compared with 1.1 per cent in the financial year 2004. Moody's said this target "will be very difficult to achieve."

HP recently appointed a new CEO - Mark Hurd. Moody's notes that he is likely to need a few months to get up to speed before making strategic changes.

The credit agency was just as dismal with its predictions for HP's services business. The report notes that service margins have fallen for the last five quarters.

But the printer giant was credited with some progress on personal systems. Cost structure has been improved thanks to better supply chain controls and lower warranty costs. HP is also making more direct sales and "upselling higher margin product around the PC". Moody's notes that operating margins reached 2.1 per cent in the most recent quarter - hitting the target of 2 to 4 per cent operating margin set at the time of the Compaq takeover.

HP remains a very low financial risk with $13.6bn of balance sheet cash.®

Related stories

HP's Hurd lets us pretend Compaq never happened
HP sues printer-cartridge refillers
'What does HP do?' asks Europe's biggest dealer

Boost IT visibility and business value

More from The Register

next story
Assange™: Hey world, I'M STILL HERE, ignore that Snowden guy
Press conference: ME ME ME ME ME ME ME (cont'd pg 94)
Premier League wants to PURGE ALL FOOTIE GIFs from social media
Not paying Murdoch? You're gonna get a right LEGALLING - thanks to automated software
Online tat bazaar eBay coughs to YET ANOTHER outage
Web-based flea market struck dumb by size and scale of fail
Amazon takes swipe at PayPal, Square with card reader for mobes
Etailer plans to undercut rivals with low transaction fee offer
US regulators OK sale of IBM's x86 server biz to Lenovo
Now all that remains is for gov't offices to ban the boxes
XBOX One will learn to play media from USB and DLNA sources
Hang on? Aren't those file formats you hardly ever see outside torrents?
Class war! Wikipedia's workers revolt again
Bourgeois paper-shufflers have 'suspended democracy', sniff unpaid proles
prev story

Whitepapers

Endpoint data privacy in the cloud is easier than you think
Innovations in encryption and storage resolve issues of data privacy and key requirements for companies to look for in a solution.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Top 8 considerations to enable and simplify mobility
In this whitepaper learn how to successfully add mobile capabilities simply and cost effectively.
Solving today's distributed Big Data backup challenges
Enable IT efficiency and allow a firm to access and reuse corporate information for competitive advantage, ultimately changing business outcomes.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.