Moody's responds to H-P's (HPQ) poor FY13 guidance by placing the IT giant's debt ratings, which...

Moody's responds to H-P's (HPQ) poor FY13 guidance by placing the IT giant's debt ratings, which vary based on debt type, under review for possible downgrade. Though noting H-P is still producing healthy free cash flow, Moody's is on edge over whether the company can stabilize its business and pay down debt while improving its "competitive profile." UBS recently noted CDS prices for H-P's debt have risen sharply, and suggested H-P split off its financial services arm to lower its $20B debt load.
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Comments (2)
  • june1234
    , contributor
    Comments (4504) | Send Message
    Those would be the CDSs sold as insurance in case of HP default? save the fact there is never enough money if any to pay off any claims , technically and legally a CDS is not insurance even though it is sold as insurance against default by wall street. As such there is no requirement to keep enough funds available to pay off any claims(see 08 housing meltdown, all that stuff was backed by worthless CDSs). Good to see their learned their lesson
    4 Oct 2012, 07:14 PM Reply Like
  • jstratt
    , contributor
    Comments (4029) | Send Message
    I think it is becoming clear that Meg Whitman is over her head as CEO as well. It is hard to see how they could have damaged every business they operate in?


    I may get back into HPQ in the near future. here is why


    > valued at .24 per sales dollar
    > fwd PE of 3.78
    > massive write offs to make for easier future comparisons
    > heavy buyback of stock mainly with additional debt wasnt very smart but absent solvency issues will raise EPS


    Their is no hurry to buy into HPQ until around earnings report and they come clean. Some things that should be considered are additional negative disclosures and a potential dividend reduction or elimination.


    I would also suggest that out of financial pressure the worst BOD in history will be actively trying to carve out pieces to sell off, sooner rather than later.


    In short despite all the bad news HPQs businesses are not going away like Kodak or DEC. HPQ still has significant cash flow and suffers mainly from being the worst BOD and management in modern corporate history.


    As a Leadership team HPQ Directors and top leaders are a stain on capitalism and will be removed.


    PS If only they had just let Mark Hurd run the company none of this would be happening.
    5 Oct 2012, 06:09 PM Reply Like
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