Moody’s slashes Hewlett-Packard's credit rating

Moody’s slashes Hewlett-Packard's credit rating

Summary: Moody’s is downgrading Hewlett-Packard's credit rating over "execution challenges," amid other problems.


November has not been good to Hewlett-Packard. Last week (and spilling over into this week), there has been the growing Autonomy debacle.

Now it is being reported that Moody’s Investors Service is slashing the tech giant's credit rating.

According to Bloomberg, Moody's downgraded HP's long-term credit rating from A3 to Baa1, which is three levels above junk, with a negative outlook.

"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," Richard Lane, a Moody’s senior vice president, wrote in the statement.

Sales at Hewlett-Packard will decline 5 percent next year and operating margins will narrow, compared with the company’s historical average, Moody’s said.

Along with "execution challenges" mentioned by Moody's in Bloomberg's report, the recently revealed $8.8 billion loss over the Autonomy deal is also playing into this.

Thus, this is only the latest bit of bad news for HP this week. Here's a recap.

On Monday, an HP investor filed a lawsuit at a federal court in San Francisco on Monday, alleging that the tech giant knew its statements about its Autonomy acquisition were misleading, which led the stock to fall.

Then on Tuesday, Autonomy's founder and former CEO Mike Lynch got into an open letter war over allegations by HP regarding "serious accounting improprieties" that were said to have taken place at Autonomy before the acquisition was completed.

And that brings us to today. Perhaps Thursday will bring better news for HP. Or maybe not.

Topics: Hewlett-Packard, Tech Industry

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.


1 comment
Log in or register to join the discussion
  • What are they smoking at Moody's?

    Despite the Autonomy debacle, and the GAAP loss it created, let's not forget that HP is still generating billions in free cash flow. I can't see a realistic scenario where HP defaults on their commercial paper.