TEXT-S&P: Hewlett-Packard ratings unchanged by impairment

Tue Nov 20, 2012 10:53am EST

Nov 20 - Standard & Poor's Ratings Services said today that its ratings and
outlook on Hewlett-Packard Co. (BBB+/Stable/A-2) remain unchanged
following the company's recent announcement that it incurred an $8.8 billion
goodwill impairment charge related to its 2011 acquisition of Autonomy Corp.
plc. The noncash impairment charge does not alter our expectation that HP will
maintain its "satisfactory" business profile and "intermediate" financial
profile, despite highly competitive market conditions, expectations of a
protracted operational turnaround, and near-term strategic execution risks.

HP reported revenues for the quarter ended Oct. 31, 2012, of $30 billion, down 
4% (on a constant currency basis) from the prior-year period. We expect HP's 
revenues to continue to fall at an annual mid-single-digit rate into fiscal 
2013, because of ongoing weakness across its hardware businesses. Importantly, 
HP generated free operating cash flow of about $6.9 billion in fiscal 2012, 
somewhat exceeding our expectations. The stable outlook reflects our 
expectation that HP's more moderate financial policies and commitment to 
restoring its balance sheet will sustain debt protection metrics that are 
appropriate for the current rating level.
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