Feeds

HP hit with a Moody...

Agency cuts rating

  • alert
  • submit to reddit

Combat fraud and increase customer satisfaction

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

3 Big data security analytics techniques

More from The Register

next story
Dropbox defends fantastically badly timed Condoleezza Rice appointment
'Nothing is going to change with Dr. Rice's appointment,' file sharer promises
Audio fans, prepare yourself for the Second Coming ... of Blu-ray
High Fidelity Pure Audio – is this what your ears have been waiting for?
Did a date calculation bug just cost hard-up Co-op Bank £110m?
And just when Brit banking org needs £400m to stay afloat
Sorry London, Europe's top tech city is Munich
New 'Atlas of ICT Activity' finds innovation isn't happening at Silicon Roundabout
MtGox chief Karpelès refuses to come to US for g-men's grilling
Bitcoin baron says he needs another lawyer for FinCEN chat
Zucker punched: Google gobbles Facebook-wooed Titan Aerospace
Up, up and away in my beautiful balloon flying broadband-bot
Apple DOMINATES the Valley, rakes in more profit than Google, HP, Intel, Cisco COMBINED
Cook & Co. also pay more taxes than those four worthies PLUS eBay and Oracle
prev story

Whitepapers

Top three mobile application threats
Learn about three of the top mobile application security threats facing businesses today and recommendations on how to mitigate the risk.
Combat fraud and increase customer satisfaction
Based on their experience using HP ArcSight Enterprise Security Manager for IT security operations, Finansbank moved to HP ArcSight ESM for fraud management.
The benefits of software based PBX
Why you should break free from your proprietary PBX and how to leverage your existing server hardware.
Five 3D headsets to be won!
We were so impressed by the Durovis Dive headset we’ve asked the company to give some away to Reg readers.
SANS - Survey on application security programs
In this whitepaper learn about the state of application security programs and practices of 488 surveyed respondents, and discover how mature and effective these programs are.