Fitch Upgrades EDS' IDR to 'A+' Following HP Guarantee of EDS Debt; Outlook Stable

NEW YORK--(BUSINESS WIRE)--Fitch Ratings has upgraded Electronic Data Systems, LLC's (EDS - formerly known as Electronic Data Systems Corporation) ratings subsequent to Hewlett-Packard Company's (HP - rated 'A+/F1'/Stable Rating Outlook) announcement that it will unconditionally and irrevocably guarantee the debt of EDS. HP completed the acquisition of EDS on Aug. 26, 2008. The ratings for EDS have been upgraded as follows:

--Issuer Default Rating (IDR) to 'A+' from 'BBB';

--Senior unsecured debt to 'A+' from 'BBB'.

Furthermore, Fitch has withdrawn EDS' bank credit facility rating of 'BBB' and removed the company from Rating Watch Positive where it was placed on May 13, 2008 when the acquisition was initially proposed. The Rating Outlook is Stable.

Approximately $2.1 billion of debt is affected by Fitch's action.

As a result of the guarantee, EDS' ratings are supported by HP's:

--Strong financial flexibility and liquidity provided by a significant cash position (majority overseas) and robust free cash flow.

--Significant and increasing recurring revenue (approximately 40% of total revenue) via outsourcing services, printer supplies, technology services, and software maintenance.

--Solid revenue growth and margin expansion across most business segments, which Fitch believes provides greater diversity and stability to the company's financial profile.

--Broad product portfolio with strong market share positions in printing, personal computers (PC), enterprise systems, and information technology (IT) services.

--Geographically diversified revenue base, as over 60% of revenue is derived from outside the US.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.