Moody’s slashes HP credit rating
PC market slump and Autonomy woes drag outlook down to negative
Moody’s Investors Service downgraded Hewlett-Packard Co form A3 to Baa1 (only three levels above junk) with a negative outlook, citing concerns over the hardware giant’s ability to face competition and “execution challenges”, Bloomberg reported.
HP CEO Meg Whitman has yet to win the confidence of investors with her plan to revive growth in a global market that is increasingly favouring tablets.
Troubles were exacerbated by allegations of false accounting leveled at HP’s recent software maker acquisition Autonomy Corp, which led to a $8.8bn writedown against the purchase.
“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,” Moody’s senior vice president Richard Lane wrote in a statement.
“Nobody is worried about HP defaulting, but the downgrade shows a lack of confidence in HP’s turnaround and its ability to be a powerhouse going forward,” said Erik Gordon, a professor at the Ross School of Business at the University of Michigan.