NEW YORK (AP) — Moody’s Investors Service on Friday cut the ratings outlook for Hewlett-Packard Co. to negative from stable, citing uncertainty surrounding the technology conglomerate’s plan to shut down its mobile devices business, try spinning off its PC business and pay about $10 billion for business software maker Autonomy Corp.
HP’s PC business is the largest in the world. The planned acquisition is one of its largest ever.
The ratings agency said it expects the moves to hurt the company’s earnings at least in the near future. Over the next 12 to 18 months, Moody’s predicts a weakening economy will compound operational challenges for the company.
HP also said Thursday that its third-quarter net income rose, but it gave a lower outlook for the current quarter than analysts expected and it lowered its revenue outlook for the full year.
Despite the expected tough road ahead, Moody’s underscored that “HP retains a number of competitive and financial strengths that are consistent with its current rating.” Moody’s currently rates HP’s long-term debt at Aa2, it’s third-highest investment grade rating.
HP shares sank to a 6-year low Friday, falling more than 20 percent to $23.44. It has traded as high as $49.39 the past year.