Moody’s Lowers Stellar Credit Rating of IBM : Technology: The agency warns of a deterioration in the computer giant’s competitive position.

NEW YORK — International Business Machines Corp. lost its coveted triple-A bond status Wednesday when a credit rating agency downgraded the computer giant’s bonds, dealing a nasty blow to the IBM image.

Moody’s Investors Service Inc. said it cut IBM two notches to AA-2, warning of a deterioration in the competitive position of the world’s biggest computer maker.

AAA is the highest credit rating that the Wall Street agency assigns, reflecting a pristine business risk for banks and other creditors. The lower level of AA-2 still reflects a very high quality.

The move affects $18 billion worth of debt outstanding at IBM and its subsidiaries, IBM Credit Corp. and IBM International Finance.

“IBM’s decline in market share reflects a deterioration in its competitive position and reduced influence over its customer base,” Moody’s said.

The agency said the fierce competitive environment will continue to cause volatility in IBM’s operating performance. The firm’s returns and margins will stabilize at lower levels than in the past, the agency warned.

Standard & Poor’s Corp., the other leading Wall Street credit rating agency, said it could also downgrade IBM from AAA if the company does not regain profitability.

Armonk, N.Y.-based IBM said Moody’s downgrading will have a minimal impact on its financing. It also said it is confident of its ability to meet dividend and interest obligations.

An IBM spokesman said the company was “disappointed” by Moody’s decision.

The computer maker called its poor financial performance in 1991 an “exception.”

But analysts said the downgrading was overdue.

“They say the house is on fire, but actually the house has already burned down,” said David Wu of S. G. Warburg. “It’s about time they downgraded.”

IBM, a pioneer in computer development, is now considered slow in bringing out new products. The company faces tough competition in markets for personal computers, software and mainframe components.

The company has undergone dramatic changes the past year in an effort to regain profitability.

Once renowned as a center of steady profit and secure employment, IBM rid itself of 29,000 jobs last year and reported its first-ever annual loss--$2.83 billion.

The financial and job losses were due in part to a multibillion-dollar restructuring program designed to transform the way IBM does business by giving autonomy to individual operating units.

IBM shares ended 87.5 cents lower at $87.375 on the New York Stock Exchange after the Moody’s announcement.

IBM’s underlying businesses remain strong despite the encroachment of rivals, however. A $1.38-billion fourth-quarter loss came only after a $3.4-billion restructuring charge.

S&P; issued a negative outlook on IBM last August when the company’s profits were being pressured more heavily by recession in the United States. But the agency kept the AAA rating.