HP Response to S&P Debt Downgrade
by: skeptically 03/07/02 11:08 am
Msg: 275954 of 275954
newsalert.com rch-&StoryTitle=compaq
March 07, 2002 10:17
HP Comments on Standard and Poor's Decision
PALO ALTO, Calif.--(BUSINESS WIRE)--March 7, 2002--
Hewlett-Packard Company (NYSE:HWP) today said the company was disappointed with Standard and Poor's decision to lower its corporate and senior debt ratings on HP. S&P said that irrespective of the company's proposed merger with Compaq, HP's rating will be lower based on challenges in the company's computer hardware business as well as potential business and management disruption if the merger does not happen.
"HP continues to have one of the technology industry's strongest balance sheets with total cash and short-term investments growing $4.3 billion during the last 12 months," said Larry Tomlinson, HP treasurer.
As of January 2002, HP's total cash and short-term investments totaled $7.1 billion compared to total short-term and long-term debt of $6.0 billion, and cash generation from operations was strong, totaling $4.8 billion. During the period, inventories were down $2.0 billion and accounts receivable were down $1.3 billion.
"By merging with Compaq, our balance sheet will become even stronger, with a combined company capable of generating $6 billion annually in free cash flow and with zero net debt," said Tomlinson.
"HP's planned merger with Compaq addresses many of the issues raised by S&P by significantly improving our market position and profitability in key segments of the enterprise computing market and by creating a healthy PC business capable of generating significant cash," said Tomlinson. "Moreover, while S&P acknowledged integration challenges as part of their decision, we believe Institutional Shareholder Services' recent report noting that `half a million man-hours of work have thus far been devoted to integration planning, which surely makes HP-Compaq one of the most exhaustively planned combinations ever,' validates our efforts to ensure a successful integration." |
