The ratings on Palo Alto, Cal.-based Hewlett-Packard Co. (HP) reflect a strong business profile and modest financial risk. Technology risk and highly competitive market conditions partly offset those factors. HP is a leading global vendor of computing and imaging solutions and services, with fiscal 2009 revenues of $114.6 billion. The acquisition of EDS enhances HP's position as one of the top-tier global IT services providers, further broadening its product portfolio and earnings base. Consolidated segment operating margins have increased consistently over the past three years, to 11.5% for 2009, as operating efficiencies in Services offset volume-related weakness in Enterprise Storage and Servers (ESS) through the downturn. Reflecting expanded contribution from Services, the company's earnings mix has improved substantially, lessening its
