HP drubbing continues with Sterne Agee downgrade

AP News
Posted: Oct 05, 2012 3:31 PM
HP drubbing continues with Sterne Agee downgrade

NEW YORK (AP) — A Sterne Agee analyst became the latest to bemoan Hewlett-Packard's tough road ahead Friday, downgrading the PC maker in the aftermath of its weak outlook.

HP's CEO Meg Whitman told analysts Wednesday that internal company turmoil and the weak economy will cause HP's earnings to fall by more than 10 percent next year. That decline was not anticipated by Wall Street and came after the company reported its biggest quarterly loss in company history. The CEO said it could be 2015 before revenue growth beings to accelerate again.

Analyst Shawn Wu on Friday cut his rating for Hewlett-Packard Inc. to "Neutral" from "Buy." He had initially backed his "Buy" rating after Whitman's presentation, and said he was "reluctantly" downgrading the company because he isn't confident enough on HP's turnaround strategy, and he is afraid of more bad news that would drive down shares.

HP, headquartered in Palo Alto, Calif., is struggling with problems that stem from a combination of managerial malaise, high-priced acquisitions that haven't paid off, and an inability to offset the damage done to its personal computer and printer divisions by the rising popularity of smartphones and tablet computers.

Several other investment firms, including Raymond James, Jefferies and Stifel Nicolaus, cut their earnings estimates for the company after Wednesday's announcement.

Also on Friday, Fitch Ratings cut its ratings for Hewlett-Packard, including its long-term issuer default rating to "A-" from "A," which still is considered high credit quality. Moody's Investors Service on Thursday placed its long-term credit ratings for HP on review for a possible downgrade.

HP shares fell 4 cents to $14.90 Friday afternoon. In the days since the Wednesday announcement, the company's stock has lost about 13 percent of its value. Since the beginning of the year, the stock has dropped about 42 percent.