IBM Corp has won an affirmation of its ratings by Standard & Poor’s Corp, at single-A for the senior debt, single-A-minus for the preferred stock and A-1 for the commercial paper. Results reported for the second quarter of 1994 are an encouraging sign for the company. However, the company’s operating performance has been subpar for existing ratings over the past couple of years. Moreover, even though results were somewhat better than expected, further progress is needed to bring profitability in line with ratings. In affirming IBM’s ratings during a difficult period, S&P gave considerable benefit to present management’s plan for restructuring, which was expected to bring costs more in line with the level of business. This, along with the expectation that the company was likely to be profitable in 1994, and management’s conservative financial policies, was the basis for affirming the ratings of IBM ad its units, the agency said. The business environment and continued success at redirecting the company will remain challenges over the near term, and the outlook is still negative.
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