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

Top 5 reasons to deploy VMware with Tegile

Whitepapers

Why cloud backup?
Combining the latest advancements in disk-based backup with secure, integrated, cloud technologies offer organizations fast and assured recovery of their critical enterprise data.
A strategic approach to identity relationship management
ForgeRock commissioned Forrester to evaluate companies’ IAM practices and requirements when it comes to customer-facing scenarios versus employee-facing ones.
5 critical considerations for enterprise cloud backup
Key considerations when evaluating cloud backup solutions to ensure adequate protection security and availability of enterprise data.
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.
Choosing a cloud hosting partner with confidence
Download Choosing a Cloud Hosting Provider with Confidence to learn more about cloud computing - the new opportunities and new security challenges.