Standard and Poor downgrade Hewlett Packard:
The credit rating agency Standard and Poor’s has downgraded HP’s (Hewlett-Packard’s) overall credit rating last week.
The main reasons cited were a high turnover rate, an unclear strategy moving forward and poor overall policies.
We have already touched on HP’s misfortunes in an earlier article this week, as they promise to make a statement over the sale or non sale of the stricken mobile operating system “webOS” which they bought from Palm for $1.2 billion back in April 2010, and subsequently in August 2011 HP decided to ditch the mobile O/S and proceed to back out of manufacturing phones and PC’s to concentrate on software, so you can understand S&P’s current decision, however, the move only goes to compound HP’s problems further and here is why:
HP needs direction:
The downgrade means that HP’s long term debt rating for local and foreign debt is set at BBB+, a minor but considerable shift from the earlier figure of A. This will now make it more expensive and tougher for HP to borrow cash on the markets.
S&P also slashed their short-term rating to A-2 from A-1. S&P analyst Martha Toll Reed said in a statement:
”We have concerns that HP’s inconsistent growth strategies and high levels of board of director and senior management turnover have elevated the level of operational and execution risk in the near term,”
S&P also took into account the firms questionable takeover of “Autonomy” and said that this had reduced the companies overall liquidity and financial flexibility, and was a contributing factor to the downgrade.Anthony Munns