Feeds

Moody's slashes HP's credit rating

Predicts slide in sales next year

Beginner's guide to SSL certificates

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. ®

The next step in data security

More from The Register

next story
Phones 4u slips into administration after EE cuts ties with Brit mobe retailer
More than 5,500 jobs could be axed if rescue mission fails
JINGS! Microsoft Bing called Scots indyref RIGHT!
Redmond sporran metrics get one in the ten ring
Driving with an Apple Watch could land you with a £100 FINE
Bad news for tech-addicted fanbois behind the wheel
Murdoch to Europe: Inflict MORE PAIN on Google, please
'Platform for piracy' must be punished, or it'll kill us in FIVE YEARS
Phones 4u website DIES as wounded mobe retailer struggles to stay above water
Founder blames 'ruthless network partners' for implosion
Found inside ISIS terror chap's laptop: CELINE DION tunes
REPORT: Stash of terrorist material found in Syria Dell box
Sony says year's losses will be FOUR TIMES DEEPER than thought
Losses of more than $2 BILLION loom over troubled Japanese corp
prev story

Whitepapers

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.
WIN a very cool portable ZX Spectrum
Win a one-off portable Spectrum built by legendary hardware hacker Ben Heck
Intelligent flash storage arrays
Tegile Intelligent Storage Arrays with IntelliFlash helps IT boost storage utilization and effciency while delivering unmatched storage savings and performance.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
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.