TSC Ratings' Updates: Time Warner

The following ratings changes were generated on Thursday, Feb. 5.

We've downgraded Devon Energy(DVN), which engages in oil and gas exploration, development and production, from hold to sell. Our rating is driven by its deteriorating net income, disappointing return on equity, weak operating cash flow, generally weak debt management and decline in the stock price during the past year.

Net income decreased from $1,316 million to -$6,816 million since the same quarter a year ago, significantly underperforming the S&P 500 and the oil, gas and consumable fuels industry. Return on equity has also greatly decreased, a sign of major weakness within the corporation. Net operating cash flow has decreased by 20.4% to $1,227 million. Devon has a low debt-to-equity ratio of 0.3, though it's higher than the industry average. The company's quick ratio of 0.7 is low, demonstrating weak liquidity.

Shares have sunk by 731% compared with the year-earlier quarter, though the broader market's performance is worse. In one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.

We've downgraded Harman International Industries(HAR), which engages in the development, manufacture and marketing of audio products and electronic systems worldwide, from hold to sell. This rating is driven by the company's feeble growth in its earnings per share, deteriorating net income, disappointing return on equity, poor profit margins and generally disappointing historical performance in the stock itself.