Competitive Forces Hewlett-Packard Company (NYSE: HPQ) To Take Hit On Credit Ratings – MCO

Hewlett-Packard Company (NYSE: HPQ) took a hit on its credit rating from Moody’s Corporation (NYSE: MCO) challenging the company’s capability to face the market competition.

Moody’s Corporation (NYSE: MCO) cut the long term credit rating of the company three levels down. It’s now at Baa1 from the earlier rating of A3.

Hewlett-Packard Company (NYSE: HPQ) declared $8.8 billion write down of debt incurred due to Autonomy’s acquisition. Autonomy was earlier accused in a fraudulent case of misappropriation of accounting standards.

A poor credit rating in the market costs a lot. Now it’s the time for the company to pay a cost for it. The market demand for its technology products is now declining. By this huge cut in the credit rating of Hewlett-Packard Company (NYSE: HPQ), its $25 billion debt will get affected.

According to the senior vice president of Moody’s Corporation (NYSE: MCO), Richard Lane, Hewlett-Packard Company (NYSE: HPQ) is lacking a good credit profile to survive the competition in the market although it’s good to do in product areas.

Sales of Hewlett-Packard Company (NYSE: HPQ) is expected to decline by 5% coupled with operating income, in the coming year.

Everyone is concerned about the frog leap of Hewlett-Packard Company (NYSE:HPQ) in writing of its debt and the privilege that it achieved by way of acquiring the computer making company and its assets. But in the due course they are forgetting about the company’s downgraded ratings among its strongest competitors in the corporate world.

Confidence Ebbing

The company’s protecting cost of the bonds to be defaulted increases from a basis point of 2.9 to 366.4. 1 basis points means annually $1000 for the protection of $10 million of debt of Hewlett-Packard Company (NYSE:HPQ).

In market investors of Hewlett-Packard Company (NYSE: HPQ) has lost confidence in the company. They have lost hope in their investment of hard earned money.

Hewlett-Packard Company (NYSE: HPQ) $1.5 billion Notes yielding 2.6% has also declined.

 

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Published by Viraj Shah

Viraj Shah has done M.Com (Finance) and currently pursuing CFP. He is a technical analyst who tracks US markets along with other global markets like India very closely. He is very passionate about stocks and believes that money can always be made in market.

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