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S&P raises Apple outlook
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June 9, 1998: 4:26 p.m. ET
Computer maker revised to positive from negative after recent profits
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NEW YORK (CNNfn) - Citing the company's improved profitability and financial flexibility, Standard & Poor's Tuesday revised its outlook for Apple Computer Inc. from negative to positive.
Despite the good news, the rating on Apple's senior unsecured debt wasn't changed and remains B-, six notches below investment grade.
The low unsecured debt rating means it costs Apple more to borrow money over the short and long term.
Still, S&P left open the possibility that an upgrade could come in the foreseeable future.
"Ratings could improve if Apple is able to stabilize revenues while maintaining profitability and financial flexibility," S&P said.
Apple's recent earnings improvement played a role in its decision, S&P said. The company reported earnings of $102 million for the six months ended March 27, marking its first profitable six-month period in more than two years.
S&P also praised Apple for improving its short-term cash and investments, which stood at $1.8 billion at the end of March.
"However, longer-term concerns include Apple's ability to achieve sustainable revenue growth and profitability," the report said.
Apple (AAPL) shares reacted positively to the news Tuesday, closing up 15/16 to 28-3/16.
Apple shares have shot up substantially over the last year, although they are currently off their 52-week high of 31-5/8.
(Click here to see an Apple stock chart)
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