Moody's downgrades Dell

Moody's Investors Service said it lowered Dell Inc.'s senior rating to Baa1 from A2 and short term rating to Prime-2 from Prime-1 and placed all ratings under review for downgrade following the announcement of a definitive agreement with Michael Dell and Silver Lake to acquire Dell in a leveraged buyout.

The agency expects that conclusion of the review will likely result in a multi-notch downgrade of the long-term rating to below investment grade given the proposed transaction's planned use of debt and Dell's continuing business challenges.

Moody's said the Baa1 long-term rating reflects its view that Dell's profile has weakened, with a more aggressive financial philosophy, at the same time as Dell struggles to transform its business model away from lower-end hardware and commoditized PCs to potentially more profitable data center and enterprise solutions.

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