Click here to close now.

Welcome!

Websphere Authors: Pat Romanski, Elizabeth White, Yeshim Deniz, AppDynamics Blog, Kelly Murphy

News Feed Item

Fitch Rates Hewlett-Packard's Senior Unsecured Note Offering 'A-'; Outlook Stable

Fitch Ratings has assigned an 'A-' rating to Hewlett-Packard Company's (HP) proposed offering of senior unsecured notes. Net proceeds from the offering will be used for general corporate purposes. The Rating Outlook is Stable.

KEY RATING DRIVERS

The ratings and Stable Outlook reflect HP's:

--Strong core credit metrics, with core (non-financing) leverage (core debt/ core operating EBITDA) of 0.9x as of Oct. 31, 2013 compared with 1.1x in the prior year as significant debt reduction more than offset revenue and profitability pressures. Core interest coverage (core EBITDA/ core interest expense) remains solid at 31x compared with 27x in the year ago period.

Fitch forecasts core leverage will remain below 1x through fiscal 2016 reflecting revenue stabilization, modest EBITDA margin expansion due to restructuring activities and positive revenue mix, and marginal incremental debt reduction.

--Strong liquidity and free cash flow (FCF), consisting of $12.2 billion of cash (primarily offshore), $7.5 billion of undrawn committed credit facility capacity and annual FCF (post dividends) typically in excess of $5 billion.

--Significant scale and broad portfolio, which provides purchasing leverage for shared components and strengthens the resiliency of its total revenue.

--Strong worldwide market share, including leading unit market share in servers and printers and second largest share in PCs, IT services and networking.

--Significant recurring revenue (33% of total revenue) primarily via printer supplies, outsourcing and technology services, and software maintenance.

--Geographically diversified revenue base with approximately 66% of revenue derived from outside the U.S.

Rating concerns include:

--Operating margin compression in HP's Enterprise Group due to pricing pressures and adverse revenue mix in industry standard servers (ISS), and declines in traditional storage products (tape and EVA SAN), partially offset by new converged storage products (3PAR StoreServ, StoreOnce and StoreAll).

--Continued secular decline in high margin business critical systems (BCS) revenue, which declined 26% in the latest 12 months (LTM) ended Oct. 31, 2013. HP's technology services revenue and operating margin is also adversely affected as customers gradually migrate to UNIX servers offered by competitors (IBM and Oracle) or x86 servers that have lower attach rates and less profitable support contracts.

--Potential long-term hardware revenue and profitability pressures if commercial customers aggressively adopt cloud computing and the market for cloud services is highly concentrated. In this scenario, cloud providers would have significant pricing leverage due to scale and/or could accelerate their utilization of unbranded custom-built servers.

--Aggressive pricing and weak global demand for PCs due to cyclical factors affecting the commercial PC business and secular factors in terms of tablet or smartphone substitution adversely affecting consumer PC demand. This risk is muted by the low profit contribution of HP's PC business, which Fitch estimates at 8%-9% of total segment operating profit, despite accounting for 28% of total revenue.

RATING SENSITIVITIES

The ratings may be upgraded in the event of:

--Strong revenue growth and expanding margins for the Enterprise Group, which provides greater diversity to the company's operating income mix. Printing accounted for 36% of total segment operating profit in the LTM ended Oct. 31, 2013 compared with approximately 28% in the prior three years.

--Material revenue shift towards software provides margin expansion and greater recurring revenue through subscriptions or maintenance.

The ratings may be downgraded in the event of:

--Continued long-term market share losses in industry standard servers, indicating lackluster demand for HP's new Moonshot servers.

--Significant decline in supplies demand, particularly commercial, which is not offset by growth in other HP segments.

--The company divests any businesses that results in material dis-synergies or EBITDA deterioration.

In addition to its solid cash position and consistent FCF, HP's liquidity is further supported by two undrawn revolving credit facilities, which had aggregate capacity of $7.5 billion as of Oct. 31, 2013, and multiple revolving trade receivables facilities with $838 million of available capacity as of July 31, 2013 (latest date available). HP's revolving credit facilities consist of a $4.5 billion credit facility expiring in February 2015 and a $3 billion facility expiring in May 2017. Minimum interest coverage of 3x is the sole financial covenant.

Total debt was $22.6 billion as of Oct. 31, 2013, consisting of short-term debt of nearly $6 billion, primarily current portion of long-term debt, and long-term debt of $16.6 billion. Fitch estimates approximately $10.9 billion, or 48% of total debt, is attributable to HP's customer-financing business.

Fitch currently rates HP and its wholly owned subsidiaries as follows:

HP

--Long-term Issuer Default Rating (IDR) at 'A-';

--Short-term IDR at 'F2';

--Senior credit facilities at 'A-';

--Senior unsecured debt at 'A-';

--Commercial paper (CP) at 'F2'.

Hewlett-Packard International Bank PLC

--Short-term IDR at 'F2';

--CP 'at F2'.

Electronic Data Systems LLC

--Long-term IDR at 'A-';

--Senior unsecured debt at 'A-'.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Corporate Rating Methodology' (Aug. 5, 2013).

Applicable Criteria and Related Research:

Corporate Rating Methodology: Including Short-Term Ratings and Parent and Subsidiary Linkage

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=715139

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=813933

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

More Stories By Business Wire

Copyright © 2009 Business Wire. All rights reserved. Republication or redistribution of Business Wire content is expressly prohibited without the prior written consent of Business Wire. Business Wire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

@ThingsExpo Stories
One of the biggest impacts of the Internet of Things is and will continue to be on data; specifically data volume, management and usage. Companies are scrambling to adapt to this new and unpredictable data reality with legacy infrastructure that cannot handle the speed and volume of data. In his session at @ThingsExpo, Don DeLoach, CEO and president of Infobright, will discuss how companies need to rethink their data infrastructure to participate in the IoT, including: Data storage: Understanding the kinds of data: structured, unstructured, big/small? Analytics: What kinds and how responsiv...
Today’s enterprise is being driven by disruptive competitive and human capital requirements to provide enterprise application access through not only desktops, but also mobile devices. To retrofit existing programs across all these devices using traditional programming methods is very costly and time consuming – often prohibitively so. In his session at @ThingsExpo, Jesse Shiah, CEO, President, and Co-Founder of AgilePoint Inc., discussed how you can create applications that run on all mobile devices as well as laptops and desktops using a visual drag-and-drop application – and eForms-buildi...
Sensor-enabled things are becoming more commonplace, precursors to a larger and more complex framework that most consider the ultimate promise of the IoT: things connecting, interacting, sharing, storing, and over time perhaps learning and predicting based on habits, behaviors, location, preferences, purchases and more. In his session at @ThingsExpo, Tom Wesselman, Director of Communications Ecosystem Architecture at Plantronics, will examine the still nascent IoT as it is coalescing, including what it is today, what it might ultimately be, the role of wearable tech, and technology gaps stil...
Advanced Persistent Threats (APTs) are increasing at an unprecedented rate. The threat landscape of today is drastically different than just a few years ago. Attacks are much more organized and sophisticated. They are harder to detect and even harder to anticipate. In the foreseeable future it's going to get a whole lot harder. Everything you know today will change. Keeping up with this changing landscape is already a daunting task. Your organization needs to use the latest tools, methods and expertise to guard against those threats. But will that be enough? In the foreseeable future attacks w...
17th Cloud Expo, taking place Nov 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA, will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy. Meanwhile, 94% of enterprises are using some form of XaaS – software, platform, and infrastructure as a service.
Cloud is not a commodity. And no matter what you call it, computing doesn’t come out of the sky. It comes from physical hardware inside brick and mortar facilities connected by hundreds of miles of networking cable. And no two clouds are built the same way. SoftLayer gives you the highest performing cloud infrastructure available. One platform that takes data centers around the world that are full of the widest range of cloud computing options, and then integrates and automates everything. Join SoftLayer on June 9 at 16th Cloud Expo to learn about IBM Cloud's SoftLayer platform, explore se...
The explosion of connected devices / sensors is creating an ever-expanding set of new and valuable data. In parallel the emerging capability of Big Data technologies to store, access, analyze, and react to this data is producing changes in business models under the umbrella of the Internet of Things (IoT). In particular within the Insurance industry, IoT appears positioned to enable deep changes by altering relationships between insurers, distributors, and the insured. In his session at @ThingsExpo, Michael Sick, a Senior Manager and Big Data Architect within Ernst and Young's Financial Servi...
15th Cloud Expo, which took place Nov. 4-6, 2014, at the Santa Clara Convention Center in Santa Clara, CA, expanded the conference content of @ThingsExpo, Big Data Expo, and DevOps Summit to include two developer events. IBM held a Bluemix Developer Playground on November 5 and ElasticBox held a Hackathon on November 6. Both events took place on the expo floor. The Bluemix Developer Playground, for developers of all levels, highlighted the ease of use of Bluemix, its services and functionality and provide short-term introductory projects that developers can complete between sessions.
The 3rd International @ThingsExpo, co-located with the 16th International Cloud Expo – to be held June 9-11, 2015, at the Javits Center in New York City, NY – is now accepting Hackathon proposals. Hackathon sponsorship benefits include general brand exposure and increasing engagement with the developer ecosystem. At Cloud Expo 2014 Silicon Valley, IBM held the Bluemix Developer Playground on November 5 and ElasticBox held the DevOps Hackathon on November 6. Both events took place on the expo floor. The Bluemix Developer Playground, for developers of all levels, highlighted the ease of use of...
In the consumer IoT, everything is new, and the IT world of bits and bytes holds sway. But industrial and commercial realms encompass operational technology (OT) that has been around for 25 or 50 years. This grittier, pre-IP, more hands-on world has much to gain from Industrial IoT (IIoT) applications and principles. But adding sensors and wireless connectivity won’t work in environments that demand unwavering reliability and performance. In his session at @ThingsExpo, Ron Sege, CEO of Echelon, will discuss how as enterprise IT embraces other IoT-related technology trends, enterprises with i...
Enthusiasm for the Internet of Things has reached an all-time high. In 2013 alone, venture capitalists spent more than $1 billion dollars investing in the IoT space. With "smart" appliances and devices, IoT covers wearable smart devices, cloud services to hardware companies. Nest, a Google company, detects temperatures inside homes and automatically adjusts it by tracking its user's habit. These technologies are quickly developing and with it come challenges such as bridging infrastructure gaps, abiding by privacy concerns and making the concept a reality. These challenges can't be addressed w...
We’re no longer looking to the future for the IoT wave. It’s no longer a distant dream but a reality that has arrived. It’s now time to make sure the industry is in alignment to meet the IoT growing pains – cooperate and collaborate as well as innovate. In his session at @ThingsExpo, Jim Hunter, Chief Scientist & Technology Evangelist at Greenwave Systems, will examine the key ingredients to IoT success and identify solutions to challenges the industry is facing. The deep industry expertise behind this presentation will provide attendees with a leading edge view of rapidly emerging IoT oppor...
The industrial software market has treated data with the mentality of “collect everything now, worry about how to use it later.” We now find ourselves buried in data, with the pervasive connectivity of the (Industrial) Internet of Things only piling on more numbers. There’s too much data and not enough information. In his session at @ThingsExpo, Bob Gates, Global Marketing Director, GE’s Intelligent Platforms business, to discuss how realizing the power of IoT, software developers are now focused on understanding how industrial data can create intelligence for industrial operations. Imagine ...
SYS-CON Events announced today that Liaison Technologies, a leading provider of data management and integration cloud services and solutions, has been named "Silver Sponsor" of SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York, NY. Liaison Technologies is a recognized market leader in providing cloud-enabled data integration and data management solutions to break down complex information barriers, enabling enterprises to make smarter decisions, faster.
The 17th International Cloud Expo has announced that its Call for Papers is open. 17th International Cloud Expo, to be held November 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA, brings together Cloud Computing, APM, APIs, Microservices, Security, Big Data, Internet of Things, DevOps and WebRTC to one location. With cloud computing driving a higher percentage of enterprise IT budgets every year, it becomes increasingly important to plant your flag in this fast-expanding business opportunity. Submit your speaking proposal today!
Collecting data in the field and configuring multitudes of unique devices is a time-consuming, labor-intensive process that can stretch IT resources. Horan & Bird [H&B], Australia’s fifth-largest Solar Panel Installer, wanted to automate sensor data collection and monitoring from its solar panels and integrate the data with its business and marketing systems. After data was collected and structured, two major areas needed to be addressed: improving developer workflows and extending access to a business application to multiple users (multi-tenancy). Docker, a container technology, was used to ...
Hadoop as a Service (as offered by handful of niche vendors now) is a cloud computing solution that makes medium and large-scale data processing accessible, easy, fast and inexpensive. In his session at Big Data Expo, Kumar Ramamurthy, Vice President and Chief Technologist, EIM & Big Data, at Virtusa, will discuss how this is achieved by eliminating the operational challenges of running Hadoop, so one can focus on business growth. The fragmented Hadoop distribution world and various PaaS solutions that provide a Hadoop flavor either make choices for customers very flexible in the name of opti...
For years, we’ve relied too heavily on individual network functions or simplistic cloud controllers. However, they are no longer enough for today’s modern cloud data center. Businesses need a comprehensive platform architecture in order to deliver a complete networking suite for IoT environment based on OpenStack. In his session at @ThingsExpo, Dhiraj Sehgal from PLUMgrid will discuss what a holistic networking solution should really entail, and how to build a complete platform that is scalable, secure, agile and automated.
All major researchers estimate there will be tens of billions devices - computers, smartphones, tablets, and sensors - connected to the Internet by 2020. This number will continue to grow at a rapid pace for the next several decades. With major technology companies and startups seriously embracing IoT strategies, now is the perfect time to attend @ThingsExpo, June 9-11, 2015, at the Javits Center in New York City. Learn what is going on, contribute to the discussions, and ensure that your enterprise is as "IoT-Ready" as it can be
With major technology companies and startups seriously embracing IoT strategies, now is the perfect time to attend @ThingsExpo in Silicon Valley. Learn what is going on, contribute to the discussions, and ensure that your enterprise is as "IoT-Ready" as it can be! Internet of @ThingsExpo, taking place Nov 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 17th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The Internet of Things (IoT) is the most profound change in personal an...