The ratings on Palo Alto, Cal.-based Hewlett-Packard Co. (HP) reflect its satisfactory business profile and minimal financial risk. These factors partly are offset by the significant level of operational execution risk inherent in the rapidly evolving technology market, and highly competitive industry conditions, which likely will constrain additional profitability improvements. HP is a leading global vendor of computing and imaging solutions and services, with fiscal 2006 revenues of $91.7 billion. Operating profitability has trended up over the past year, supported by improving profitability in HP's enterprise and personal systems groups, which together account for about one-half of total revenues and historically underperformed for the rating level. Standard&Poor's Ratings Services believes HP's ongoing focus on cost reductions and efficiency
