IBM faces credit rating cut from S&P
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IBM faced a downgrade to its credit rating from analysts at S&P Global on Friday, just a day after Berkshire Hathaway revealed that it sharply cut its stake in the more than century-old technology company.
S&P Global reduced its rating to A-plus, from double-A-minus.
“The downgrade reflects IBM’s transformation with operating declines in recent years as it reinvests and repositions its business to achieve better performance and our expectation that the transition to operating stability will take longer than we had previously forecast,” said S&P analyst John Moore.
The Armonk, New York-based company has embarked on a plan to move into cloud computing and artificial intelligence amid a deterioration in its legacy businesses. But investors have been losing patience, with sales having now fallen for 20-straight quarters.
IBM was initially rated in 1979 at triple-A, the highest level, by S&P, but its rating has fluctuated between double-A-minus and A-plus since 1993, according to Bloomberg data.
The move by S&P on Friday came after Berkshire said it cut its stake in Big Blue by a third. Warren Buffett, the billionaire investor in charge of Berkshire, cited strong competition from rivals for the decision.
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