HP Stock Recovers Some Ground after PC About-Face

Hewlett-Packard Co.'s stock recovered some of its recent losses Friday as investors applauded a change of heart about the technology conglomerate's previously announced plan to shed its personal computer decision.

The about-face announced late Thursday alleviated concerns that HP would compound its myriad of headaches by selling or spinning off a division that accounts for about one-third of the company's revenue.

HP announced the plan in August under its then-CEO Leo Apotheker, who lost his job last month largely because Wall Street thought getting rid of the PC business was a bad idea.

New CEO Meg Whitman reversed course after realizing that spinning off the PC division would be expensive and threaten to create new sales challenges for other product lines, such as computer printers and computer servers.

The change of heart also reduced the risk of a two-notch downgrade in HP's credit rating at Fitch.

In a Friday note, Fitch warned a one-notch downgrade remains a possibility because of HP's deteriorating financial performance and the debt that it has been taking on to finance stock repurchases and recent acquisitions, such as its recent $10 billion purchase of business software maker Autonomy.

The credit rating agency said it hopes to make a final decision shortly after HP's next quarterly earnings report, which is scheduled to be released November 21.

Another credit rating agency, Moody's Investors Service, said it is also is considering a downgrade despite HP's decision to hold on to its PC business.

The review will focus on HP's efforts to accelerate its growth and widen its profit margins.