Updated from 7:57 a.m. EDT
Moody's Investors Service slashed
debt rating by as many as four notches, citing concerns about debt relative to free cash flow in the company's core business.
Xerox's debt already carried a "junk" rating from Moody's before its senior unsecured debt was downgraded to B1 from Ba1. Moody's said its outlook is negative. The ratings changes, which will raise the copier maker's borrowing costs, affect about $9 billion of debt. Moody's also cut its ratings on Xerox's subordinated debt and its preferred stock.
Anne Mulcahy, chairman and CEO of Xerox, was quick to respond to the downgrade, saying in a statement that it was "inconsistent with the company's progress and momentum." She said the company has demonstrated improved operations and strengthened liquidity, setting the stage for "a return to full year profitability."
Shares of Xerox were dropping 11% to $8.08 the day after the downgrade.