Feeds

Moody's slashes HP's credit rating

Predicts slide in sales next year

Intelligent flash storage arrays

Moody's Investor Service has cut its credit rating on HP indicating a lack of confidence in Meg Whitman's ability to return the sickly tech monster to the road to recovery.

The rating now stands at Baa1, three levels above junk, down from the relatively exalted score of A3 - and the outlook is negative.

"Although HP will maintain strong to leading positions in a number of product areas, the company's credit profile will remain weaker than previously expected over the intermediate term," said Richard Lane, Moody's senior veep.

The downgrade follows a series of blows for HP: it has posted a string of weak quarterly financials, written down EDS and Autonomy and is in the process of axing 29,000 workers worldwide.

The Silicon Valley giant is also facing a lawsuit from one investor amid claims of mismanagement.

The Moody's exec predicted HP's top line will slide by 5 per cent next year and operating margins will shrink relative to the vendor's historic average.

The company generated a whopping $4.1bn in cash flow from operations in its Q4 and $10.6bn for the year, which Whitman said was more than firms including Coca Cola, Disney and McDonalds.

The problem was that its hardware businesses, the backbone of HP, took a beating in Q4, with PC revenue down 14 per cent, printing down 5.3 per cent, and enterprise server, storage and networking sales down 8.6 per cent.

Services were down too, by 6 per cent, and the only light in the portfolio came from HP Software, up 14 per cent.

Whitman said during a Q4 conference call that HP's R&D investment will begin to pay off, cost will move more in line with sales and HP will continue to pay down debts.

"These are real challenges and we don't take any of them lightly," she said.

Resellers have been incredibly loyal throughout these troubles and maintained a silent vigil.

One source from a large HP partner told us he believed Whitman is a good leader "who has the ability to out of the other side, but it's a multiple year journey".

He added: "HP has had an extremely difficult few years accentuated by multiple CEO [departures] and poor acquisitions, except 3Par. At the moment I'd say HP has the general support of customers and partners.

"However, if they were to announce another major issue within the next 12 months I wonder if that would damage them more permanently," said the partner. ®

Secure remote control for conventional and virtual desktops

More from The Register

next story
Spies, avert eyes! Tim Berners-Lee demands a UK digital bill of rights
Lobbies tetchy MPs 'to end indiscriminate online surveillance'
Inequality increasing? BOLLOCKS! You heard me: 'Screw the 1%'
There's morality and then there's economics ...
Google hits back at 'Dear Rupert' over search dominance claims
Choc Factory sniffs: 'We're not pirate-lovers - also, you publish The Sun'
While you queued for an iPhone 6, Apple's Cook sold shares worth $35m
Right before the stock took a 3.8% dive amid bent and broken mobe drama
How the FLAC do I tell MP3s from lossless audio?
Can you hear the difference? Can anyone?
4chan outraged by Emma Watson nudie photo leak SCAM
In the immortal words of Shaggy, it wasn't me us ... amirite?
prev story

Whitepapers

Providing a secure and efficient Helpdesk
A single remote control platform for user support is be key to providing an efficient helpdesk. Retain full control over the way in which screen and keystroke data is transmitted.
Intelligent flash storage arrays
Tegile Intelligent Storage Arrays with IntelliFlash helps IT boost storage utilization and effciency while delivering unmatched storage savings and performance.
Beginner's guide to SSL certificates
De-mystify the technology involved and give you the information you need to make the best decision when considering your online security options.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.
Secure remote control for conventional and virtual desktops
Balancing user privacy and privileged access, in accordance with compliance frameworks and legislation. Evaluating any potential remote control choice.