Moody's may cut Hewlett-Packard's A3 senior unsecured rating
Oct 4 (Reuters) - Moody's Investors Service warned on Thursday it may cut Hewlett-Packard's A3 senior unsecured credit rating, saying management's revised outlook on profitability and cash flow could lead to increased leverage.
HP's intermediate term rating is under review for downgrade, Moody's said in a statement. The short-term rating is not under review.
"The review will focus on the company's prospects to stabilize and then improve profitability and cash flow generation of its broad portfolio and to achieve meaningful cost reductions without disrupting its business execution," Moody's said.
About $31 billion of debt securities will be affected by this decision, Moody's said.
Hewlett-Packard Chief Financial Officer Cathie Lesjak told analysts and media on Wednesday that the company aims to get to mid-single A credit rating.
"We believe getting back to a mid-single A credit rating is a top priority for us," Lesjak said.
In its review, Moody's will assess HP's flexibility and commitment to reduce gross debt, as well as how it plans to reinvest in the business.
Earlier on Thursday, several brokerages cut their price targets on HP, citing the impact of a weak economy. HP has been plagued by operating problems and slow growth in its computers and printers businesses.
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