Moody's weighs HP downgrade on decision to keep PC business

New Hewlett-Packard (NYSE: HPQ) CEO Meg Whitman already has some explaining to do, just a month into her new job.

Her decision last week to keep the company's $41 billion personal computer business, which her predecessor, Leo Apotheker, in August had decided to jettison, is drawing criticism from a number of quarters. In addition, it has prompted Moody's Investors Service to place HP's long-term debt, which it currently rates A2, on review for a possible downgrade. Fitch Ratings, meanwhile, which was considering a two-notch downgrade of HP, today said keeping the business will likely mean it will downgrade it just one level.

Moody's said it will look at what keeping the PC business means to Hewlett-Packard's capital structure and liquidity.

HP used $6 billion of its $13 billion in cash reserves to acquire software company Autonomy Corp. Moody's said that although "HP maintains a solid liquidity profile," it would also look at how much it will cost to reinvigorate Hewlett-Packard's technology-services unit.

HP announces year-end earnings Nov. 21. It has seen its share price decline 34 percent this year.

For more:
- see this Bloomberg article

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