S&P downgrades Hewlett-Packard's credit
NEW YORK—Standard & Poor's Ratings Services lowered Hewlett-Packard Co.'s credit rating Wednesday, pointing to the technology conglomerate's large stock repurchase and its recent $10 billion acquisition of business software maker Autonomy Corp.
Standard & Poor's cut its rating on HP to `BBB+' from `A'. It said the Palo Alto, Calif., company's more aggressive financial stance has reduced its liquidity and financial flexibility. The new rating remains investment grade and is three notches above "junk" status. S&P's outlook on Hewlett-Packard is stable, and it removed the company from the CreditWatch list. It had been on that list with negative implications, meaning a downgrade was likely.
In July, HP approved the repurchase of another $10 billion in stock. It had $5.9 billion left on its previous stock buyback program at the time, although it spent $4.6 billion during the third quarter. In October Hewlett-Packard acquired Autonomy, which specializes in finding electronic data stored on companies' computers.
Fitch Ratings said in October that it might downgrade HP's credit because of its weakening financial performance, as well as the stock repurchases and the Autonomy deal.
HP's shares rose $1.05, or 3.9 percent, to $27.95 on Wednesday, and were unchanged in aftermarket trading.