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HP Outlook Revised to Negative by S&P

September 22, 1998|Bloomberg News

Hewlett-Packard Co.'s debt ratings might be cut by Standard & Poor's because of concerns about profitability and growth at the No. 3 computer maker. The ratings agency revised its outlook on the Palo Alto-based company to negative from positive, reflecting concerns that extremely competitive industry conditions and weakness in Asian markets will hamper HP's efforts to increase profit. S&P now has senior debt, corporate credit and bank loan ratings of "AA+" on HP. Hewlett-Packard has faced slumping profit growth in the last two years, hurt by fiercely competitive personal computer prices, new product cycles and economic troubles in Asia, where the company gets about 16% of its sales. HP has reported disappointing earnings in nine of the last 10 quarters. Also, when the company reported fiscal third-quarter earnings last month, HP officials weren't optimistic about a turnaround any time soon. HP last week said it expects to take $150 million in charges in the fourth quarter ending in October for cost cuts. HP shares rose 81 cents to close at $51.88 on the New York Stock Exchange.

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