Feeds

HP hit with a Moody...

Agency cuts rating

  • alert
  • submit to reddit

The essential guide to IT transformation

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

Next gen security for virtualised datacentres

More from The Register

next story
6 Obvious Reasons Why Facebook Will Ban This Article (Thank God)
Clampdown on clickbait ... and El Reg is OK with this
No, thank you. I will not code for the Caliphate
Some assignments, even the Bongster decline must
Caught red-handed: UK cops, PCSOs, specials behaving badly… on social media
No Mr Fuzz, don't ask a crime victim to be your pal on Facebook
Barnes & Noble: Swallow a Samsung Nook tablet, please ... pretty please
Novelslab finally on sale with ($199 - $20) price tag
Ballmer leaves Microsoft board to spend more time with his b-balls
From Clippy to Clippers: Hi, I see you're running an NBA team now ...
Banking apps: Handy, can grab all your money... and RIDDLED with coding flaws
Yep, that one place you'd hoped you wouldn't find 'em
Video of US journalist 'beheading' pulled from social media
Yanked footage featured British-accented attacker and US journo James Foley
Call of Duty daddy considers launching own movie studio
Activision Blizzard might like quality control of a CoD film
Primetime precrime? Minority Report TV series 'being developed'
I have to know. I have to find out what happened to my life
prev story

Whitepapers

A new approach to endpoint data protection
What is the best way to ensure comprehensive visibility, management, and control of information on both company-owned and employee-owned devices?
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.
Maximize storage efficiency across the enterprise
The HP StoreOnce backup solution offers highly flexible, centrally managed, and highly efficient data protection for any enterprise.
How modern custom applications can spur business growth
Learn how to create, deploy and manage custom applications without consuming or expanding the need for scarce, expensive IT resources.
Next gen security for virtualised datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.