The ratings on Palo Alto, Cal.-based Hewlett-Packard Co. (HP) reflect a satisfactory business profile and minimal financial risk. These factors are partially offset by the significant level of operational execution risk inherent in the rapidly evolving technology market, as well as highly competitive industry conditions, which are likely to 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. The company's operating profitability has trended up over the past year, supported by improving profitability in its enterprise and personal systems groups, which together account for about half of total revenues (and have historically underperformed for the rating level). We believe that HP's ongoing focus on cost
