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Moody's cuts HP long-term debt rating to Baa1

Associated Press Modified: November 28, 2012 at 4:30 pm •  Published: November 28, 2012
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To add to its doldrums, HP announced last week that it took an $8.8 billion charge because it determined a business software maker it acquired for $10 billion last year was worth far less. HP has alleged that the acquired company, Autonomy, lied about its finances.

In August, HP disclosed that its $13 billion acquisition of technology consulting service Electronic Data Systems wasn't working out as well as management had expected.

The trouble in Autonomy and EDS has forced HP to absorb nearly $17 billion in accounting charges in the past two quarters, resulting in the biggest losses in the company's 73-year history.

HP's market value has been cut in half since the beginning of the year.

Moody's warned that HP's travails might cause it to undertake "shareholder friendly actions or portfolio repositioning" that would further weaken its credit standing.

Moody's assigns the "Baa1" rating to debt that it believes is on the lower end of investment grade. Companies with the rating are subject to moderate risk of default, placing them somewhere between safe and speculative investments.

HP's stock closed up 37 cents, or 3 percent, at $12.73.