Moody's cuts HP to negative

Moody's Investors Service said it changed the outlook of Hewlett Packard Co. (A2 long-term, P-1 short term) to negative from stable.

This action follows HP's announcement of an agreement to acquire U.K.-based software firm Autonomy Corporation plc for $11.7 billion that is likely to partially debt funded, the potential spinoff of its personal computer business, the shutdown of its tablet and smartphone activities and a downward revision to company's financial performance over at least the near term.

The negative outlook reflects a level of performance uncertainty stemming from HP's significant strategic announcements regarding its portfolio composition and an increase in financial leverage as a result of the proposed acquisition of Autonomy, the agency said.

Despite these challenges, HP retains a number of competitive and financial strengths that are consistent with its current rating, the agency added. Nonetheless, Moody's expects to place the ratings under review when sufficient information and clarity surrounding the company's strategic actions is determinable or earlier if conditions warrant.

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