Feeds

Moody's slashes HP's credit rating

Predicts slide in sales next year

Reducing security risks from open source software

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. ®

Mobile application security vulnerability report

More from The Register

next story
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
Nadella: Apps must run on ALL WINDOWS – PCs, slabs and mobes
Phone egg, meet desktop chicken - your mother
HP, Microsoft prove it again: Big Business doesn't create jobs
SMEs get lip service - what they need is dinner at the Club
White? Male? You work in tech? Let us guess ... Twitter? We KNEW it!
Grim diversity numbers dumped alongside Facebook earnings
ITC: Seagate and LSI can infringe Realtek patents because Realtek isn't in the US
Land of the (get off scot) free, when it's a foreign owner
Dude, you're getting a Dell – with BITCOIN: IT giant slurps cryptocash
1. Buy PC with Bitcoin. 2. Mine more coins. 3. Goto step 1
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
prev story

Whitepapers

Designing a Defense for Mobile Applications
Learn about the various considerations for defending mobile applications - from the application architecture itself to the myriad testing technologies.
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.
Reducing security risks from open source software
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Consolidation: the foundation for IT and business transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.