Credit rating agency Fitch is still in the process of assessing Apple's (NASDAQ:AAPL) credit quality and has not released a public rating, however, the company has indicated that Apple's business model is "inconsistent" with a 'AA' rating, and that its rating would "likely fall in the high single 'A' rating category."

This would be the third-highest rating in Fitch's scale. Fitch reported its thinking this morning.

Fitch acknowledges that Apple has a "significant liquidity cushion" but that it faces inherent business risks characteristic of all consumer-centric hardware companies. Volatile consumer preferences, competitive pressures that promote commoditization, and rapid technological shifts are among the concerns noted. Fitch notes other examples, such as Sony, Nokia, and Google subsidiary Motorola Mobility, as other consumer product companies that have fallen victim to these factors.

Few large tech companies earn high marks from Fitch. Microsoft carries a 'AA+' rating; IBM and Oracle both carry 'A+' ratings. Fitch notes that these companies have recurring software revenue with high switching costs.

Apple announced last week that it would be borrowing money to help execute an increased share buyback. Apple was assigned an AA+ credit rating by Standard & Poor's (and the equivalent Aa1 rating by Moody's), just one notch below Microsoft -- and at the same level as the federal government.


Fool contributor Evan Niu, CFA, owns shares of Apple. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple, Google, International Business Machines., Microsoft, and Oracle.. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.