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1 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice. © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice. HP Q1 FY12 Earnings Announcement February 22, 2012 http://www.hp.com/investor/home
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HP Q1 FY12 Earnings Announcement

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Page 1: HP Q1 FY12 Earnings Announcement

1

© Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.

© Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.

HP Q1 FY12 Earnings Announcement February 22, 2012

http://www.hp.com/investor/home

Page 2: HP Q1 FY12 Earnings Announcement

2

© Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.

2

Forward-looking statements This presentation may contain forward-looking statements that involve risks, uncertainties and assumptions. All statements other than statements of

historical fact are statements that could be deemed forward-looking statements, including but not limited to any projections of revenue, margins, expenses,

earnings, earnings per share, tax provisions, cash flows, benefit obligations, share repurchases, currency exchange rates, the impact of acquisitions or other

financial items; any statements of the plans, strategies and objectives of management for future operations, including the execution of cost reduction

programs and restructuring and integration plans; any statements concerning the expected development, performance or market share relating to products

or services; any statements regarding current or future macroeconomic trends or events and the impact of those trends and events on HP and its financial

performance; any statements regarding pending investigations, claims or disputes; any statements of expectation or belief; and any statements of

assumptions underlying any of the foregoing. Risks, uncertainties and assumptions include the impact of macroeconomic and geopolitical trends and events;

the competitive pressures faced by HP’s businesses; the development and transition of new products and services and the enhancement of existing

products and services to meet customer needs and respond to emerging technological trends; the execution and performance of contracts by HP and its

suppliers, customers and partners; the protection of HP’s intellectual property assets, including intellectual property licensed from third parties; integration

and other risks associated with business combination and investment transactions; the hiring and retention of key employees; assumptions related to

pension and other post-retirement costs; expectations and assumptions relating to the execution and timing of cost reduction programs and restructuring

and integration plans; the resolution of pending investigations, claims and disputes; and other risks that are described in HP’s Annual Report on Form 10-K

for the fiscal year ended October 31, 2011 and HP’s other filings with the Securities and Exchange Commission. As in prior periods, the financial information

set forth in this release, including tax-related items, reflects estimates based on information available at this time. While HP believes these estimates to be

meaningful, these amounts could differ materially from actual reported amounts in HP’s Form 10-Q for the fiscal quarter ended January 31, 2012. In

particular, determining HP’s actual tax balances and provisions as of January 31, 2012 requires extensive internal and external review of tax data (including

consolidating and reviewing the tax provisions of numerous domestic and foreign entities), which is being completed in the ordinary course of preparing HP’s

Form 10-Q. HP assumes no obligation and does not intend to update these forward-looking statements.

Page 3: HP Q1 FY12 Earnings Announcement

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© Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.

3

Use of non-GAAP financial information HP has included non-GAAP financial measures in this presentation to supplement HP’s consolidated condensed financial statements presented on a GAAP basis.

Definitions of these non-GAAP financial measures and reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures

are included elsewhere in this presentation.

HP’s management uses non-GAAP net revenue, non-GAAP operating expense, non-GAAP OI&E, non-GAAP operating profit, non-GAAP net earnings, non-GAAP

diluted earnings per share, and HP’s non-GAAP tax rate to evaluate and forecast HP’s performance before gains, losses or other charges that are considered by HP’s

management to be outside of HP’s core business segment operating results. Gross cash, net cash and free cash flow are liquidity measures that provide useful

information to management about the amount of cash available for investment in HP’s businesses, funding strategic acquisitions, repurchasing stock and other

purposes.

These non-GAAP financial measures may have limitations as analytical tools, and these measures should not be considered in isolation or as a substitute for analysis of

HP’s results as reported under GAAP. Items such as impairment of goodwill and purchased intangible assets and amortization of purchased intangible assets, though

not directly affecting HP’s cash position, represent the loss in value of intangible assets over time. The expense associated with this loss in value is not included in non-

GAAP operating profit, non-GAAP net earnings, non-GAAP diluted earnings per share and HP’s non-GAAP tax rate and therefore does not reflect the full economic

effect of the loss in value of those intangible assets. In addition, items such as restructuring charges that are excluded from non-GAAP operating expense, non-GAAP

operating profit, non-GAAP net earnings, non-GAAP diluted earnings per share and HP’s non-GAAP tax rate can have a material impact on cash flows and earnings per

share. HP may not be able to liquidate the long-term investments included in gross cash immediately, which may limit the usefulness of gross cash as a liquidity

measure. In addition, free cash flow does not represent the total increase or decrease in the cash balance for the period. The non-GAAP financial information that we

provide also may differ from the non-GAAP information provided by other companies.

We compensate for the limitations on our use of these non-GAAP financial measures by relying primarily on our GAAP financial statements and using non-GAAP

financial measures only supplementally. We also provide robust and detailed reconciliations of each non-GAAP financial measure to the most directly comparable

GAAP measure, and we encourage investors to review carefully those reconciliations.

We believe that providing these non-GAAP financial measures in addition to the related GAAP measures provides investors with greater transparency to the information

used by HP’s management in its financial and operational decision-making and allows investors to see HP’s results “through the eyes” of management. We further

believe that providing this information better enables investors to understand HP’s operating performance and to evaluate the efficacy of the methodology and

information used by management to evaluate and measure such performance.

Page 4: HP Q1 FY12 Earnings Announcement

© Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.

4

1. All non-GAAP numbers have been adjusted to exclude certain items. A reconciliation of specific adjustments to GAAP results for this quarter and prior periods is included on slide 16 and in the GAAP to non-GAAP

slides that appear as part of the supplemental slides of this presentation. A description of HP’s use of non-GAAP information is provided on slide 3 under “Use of non-GAAP Financial Information.”

2. Includes Corporate Investments & Eliminations.

Q1 FY12 results overview

$ in millions Q1 Net Revenue Growth Y/Y%

Non-GAAP

OP $

Non-GAAP

OP % of rev

Non-GAAP

OP $ Y/Y

Non-GAAP

OP % Y/Y

Personal Systems Group $8,873 (15%) $464 5.2% ($208) (1.2) pts

Services $8,626 1% $905 10.5% ($476) (5.7) pts

Imaging and Printing Group $6,258 (7%) $761 12.2% ($358) (4.4) pts

Enterprise Servers, Storage

and Networking $5,018 (10%) $562 11.2% ($268) (3.6) pts

Software $946 30% $162 17.1% $42 0.5 pts

HP Financial Services $950 15% $91 9.6% $12 0.0 pts

Total HP (1) (2)

$30,036 (7%) $2,570

8.6%

($1,436)

(3.8) pts

Financial Summary • Net revenue of $30.0B, down 7% Y/Y, down 8% Y/Y in constant currency

• Non-GAAP(1) diluted EPS of $0.92, down 32% Y/Y

• GAAP diluted EPS of $0.73, down 38% Y/Y

• Cash flow from operations of $1.2B, down 61% Y/Y

• $0.8B in share repurchases and $244M in dividends

Page 5: HP Q1 FY12 Earnings Announcement

© Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.

5

Q1 FY12 revenue

By segment(1) By region

EMEA

39%, down 4% Y/Y

U.S. 34%

Asia Pacific

17%, down 10% Y/Y

Americas 44%, down 9% Y/Y

Canada/ Latin America

10%

Imaging & Printing Group

21%

Personal Systems Group

29%

Services 28%

Enterprise Servers,

Storage & Networking

16%

HP Financial Services & Corp. Investments

3% Software

3%

1. Revenue mix calculated based on total segments, which excludes eliminations and other items not included in segment results.

Page 6: HP Q1 FY12 Earnings Announcement

© Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.

6

Revenue & EPS performance

1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12

Revenue (in billions) $28.8 $27.4 $27.6 $30.8 $31.2 $30.8 $30.7 $33.3 $32.3 $31.6 $31.2 $32.3 $30.0

Non-GAAP EPS $0.93 $0.86 $0.92 $1.14 $1.07 $1.09 $1.08 $1.33 $1.36 $1.24 $1.10 $1.17 $0.92

$0.00

$0.10

$0.20

$0.30

$0.40

$0.50

$0.60

$0.70

$0.80

$0.90

$1.00

$1.10

$1.20

$1.30

$1.40

$1.50

$12

$14

$16

$18

$20

$22

$24

$26

$28

$30

$32

$34

$36

(2)

(1)(2)

1. Q4 FY2011 amount shown is for non-GAAP net revenue. All other revenue amounts shown are GAAP net revenue.

2. All non-GAAP numbers have been adjusted to exclude certain items. A reconciliation of specific adjustments to GAAP results for this quarter and prior periods is included on slide 16 and in the GAAP to non-GAAP

slides that appear as part of the supplemental slides of this presentation. A description of HP’s use of non-GAAP information is provided on slide 3 under “Use of non-GAAP Financial Information.”

Page 7: HP Q1 FY12 Earnings Announcement

7

© Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.

7 Y/Y revenue growth %

Y/Y constant currency revenue growth %

(15%)

(10%)

(5%)

0%

5%

10%

15%

20%

$4

$6

$8

$10

$12

$14

4Q10 1Q11 2Q11 3Q11 4Q11 1Q12

Y/Y

re

ve

nu

e g

row

th %

$ in

bill

ion

s

(15%)

(10%)

(5%)

0%

5%

10%

15%

20%

$0

$1

$2

$3

$4

$5

$6

$7

4Q10 1Q11 2Q11 3Q11 4Q11 1Q12

Y/Y

re

ve

nu

e g

row

th %

$ in

bill

ion

s

(15%)

(10%)

(5%)

0%

5%

10%

15%

20%

$6

$8

$10

$12

$14

$16

4Q10 1Q11 2Q11 3Q11 4Q11 1Q12

Y/Y

re

ve

nu

e g

row

th %

$ in

bill

ion

s

Americas (including U.S.)

EMEA Asia Pacific

United States

(15%)

(10%)

(5%)

0%

5%

10%

15%

20%

$2

$4

$6

$8

$10

$12

4Q10 1Q11 2Q11 3Q11 4Q11 1Q12

Y/Y

re

ve

nu

e g

row

th %

$ in

bill

ion

s

Regional revenue trends

Page 8: HP Q1 FY12 Earnings Announcement

© Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.

8

Revenue growth

1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12

Constant currency 4.2% 2.9% 4.0% -5.0% 5.4% 8.4% 10.6% 8.8% 4.3% 1.3% -2.3% -6.1% -7.9%

As reported 1.2% -3.1% -1.6% -8.4% 8.2% 12.7% 11.4% 8.1% 3.6% 2.5% 1.5% -3.0% -7.0%

(10%)

(5%)

0%

5%

10%

15%

(1)(2)

Y/Y

revenu

e g

row

th (

%)

(1)(2)

1. Q4 FY2011 percentage shown is for non-GAAP net revenue. All other percentages shown are for GAAP net revenue.

2. All non-GAAP numbers have been adjusted to exclude certain items. A reconciliation of specific adjustments to GAAP results for this quarter and prior periods is included on slide 16 and in the GAAP to non-GAAP

slides that appear as part of the supplemental slides of this presentation. A description of HP’s use of non-GAAP information is provided on slide 3 under “Use of non-GAAP Financial Information.”

Page 9: HP Q1 FY12 Earnings Announcement

$0.0

$2.0

$4.0

$6.0

$8.0

$10.0

$12.0

1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12

Personal systems group (PSG)

0%

1%

2%

3%

4%

5%

6%

7%

$0

$100

$200

$300

$400

$500

$600

$700

1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12

OP

% r

ev

en

ue

56%

36%

6%

2%

Notebooks Desktops Workstations Other

• PSG revenue of $8.9B, down 15% Y/Y

• Operating profit of $464M, 5.2% of revenue

• Total units down 18% Y/Y

• Notebook revenue down 15%, units down 18%

Y/Y

• Desktop revenue down 18%, units down 19% Y/Y

• Consumer client revenue down 25% Y/Y,

Commercial client revenue down 7% Y/Y

In billions In millions Revenue Operating profit

Q1 FY12 revenue by business

9

© Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.

Page 10: HP Q1 FY12 Earnings Announcement

43%

30%

27%

Services

2%

4%

6%

8%

10%

12%

14%

16%

18%

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12

OP

% r

ev

en

ue

$0.0

$2.0

$4.0

$6.0

$8.0

$10.0

1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12

• Services revenue of $8.6B, up 1% Y/Y

• Operating profit of $0.9B, 10.5% of revenue

• ITO revenue up 2% Y/Y

• Technology Services revenue up 2% Y/Y

• Application and Business Services revenue flat

Y/Y

Q1 FY12 revenue by business

In billions In millions Revenue Operating profit

ITO

Technology Services

Application and

Business Services

10

© Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.

Page 11: HP Q1 FY12 Earnings Announcement

$0.0

$2.0

$4.0

$6.0

$8.0

1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12

4%

8%

12%

16%

20%

$500

$700

$900

$1,100

$1,300

1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12

OP

% o

f re

ven

ue

Imaging & printing group (IPG)

65%

24%

11% Supplies

Commercial

Consumer

• IPG revenue of $6.3B, down 7% Y/Y

• Operating profit of $761M, 12.2% of revenue

• Supplies revenue down 6% Y/Y

• Total printer hardware units down 13% Y/Y

• Consumer printer hardware units down 15% Y/Y

• Commercial printer hardware units down 10% Y/Y

In billions In millions Revenue Operating profit

Q1 FY12 revenue by business

11

© Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.

Page 12: HP Q1 FY12 Earnings Announcement

61% 8%

19%

12%

0%

2%

4%

6%

8%

10%

12%

14%

16%

$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

$1,000

1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12

OP

% r

ev

en

ue

Enterprise servers, storage and networking (ESSN)

$0.0

$1.0

$2.0

$3.0

$4.0

$5.0

$6.0

1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12

Industry Standard

Servers (ISS)

Business Critical

Systems (BCS)

Storage Works Division

(SWD)

Networking

Q1 FY12 revenue by business

In billions In millions Revenue Operating profit

• ESSN revenue of $5.0B, down 10% Y/Y

• Operating profit of $562M, 11.2% of revenue

• ISS revenue down 11% Y/Y

• BCS revenue down 27% Y/Y

• Storage revenue down 6% Y/Y

• Networking revenue flat Y/Y 12

© Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.

Page 13: HP Q1 FY12 Earnings Announcement

Software

31%

46%

23% Licenses

Support

Services

$0

$200

$400

$600

$800

$1,000

$1,200

1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12

5%

10%

15%

20%

25%

30%

35%

$0

$50

$100

$150

$200

$250

$300

1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12

OP

%re

ven

ue

In millions In millions Revenue Operating profit

Q1 FY12 revenue by type

• Software revenue of $946M, up 30% Y/Y

• Operating profit of $162M, 17.1% of revenue

• Licenses revenue up 12% Y/Y

• Support revenue up 22% Y/Y

• Services revenue up 108% Y/Y 13

© Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.

Page 14: HP Q1 FY12 Earnings Announcement

59% 29%

12%

HP financial services (HPFS)

$0

$200

$400

$600

$800

$1,000

1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12

0%

2%

4%

6%

8%

10%

12%

$0

$15

$30

$45

$60

$75

$90

$105

1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12

OP

%re

ven

ue

Americas

EMEA

Asia Pacific

• HPFS revenue of $950M, up 15% Y/Y

• Operating profit of $91M, 9.6% of revenue

• Financing volume flat Y/Y

• Net portfolio assets of $12.4B, up 8% Y/Y

In millions In millions Revenue Operating profit

Q1 FY12 revenue by region

14

© Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.

Page 15: HP Q1 FY12 Earnings Announcement

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© Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.

15

Non-GAAP(1) financial information

In millions except

per share amounts

Q1 FY12

Q4 FY11

Q1 FY11

Revenue $30,036 100% $32,264 100% $32,302 100%

Cost of sales 23,313 77.6% 24,756 76.7% 24,381 75.5%

Total OpEx 4,153 13.8% 4,369 13.6% 3,915 12.1%

Operating profit 2,570 8.6%

3,139

9.7%

4,006 12.4%

Interest & other, net (221)

(125)

(97)

Pre-tax earnings 2,349 7.8% 3,014

9.3% 3,909 12.1%

Income tax 517 664

879

Net earnings 1,832 6.1% 2,350

7.3% 3,030 9.4%

EPS

$0.92

$1.17

$1.36

1. All non-GAAP numbers have been adjusted to exclude certain items. A reconciliation of specific adjustments to GAAP results for this quarter and prior periods is included on slide 16 and in the GAAP to non-GAAP

slides that appear as part of the supplemental slides of this presentation. A description of HP’s use of non-GAAP information is provided on slide 3 under “Use of non-GAAP Financial Information.”

Page 16: HP Q1 FY12 Earnings Announcement

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© Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.

16

Q1 FY12 GAAP to non-GAAP bridge

In millions except

per share amounts GAAP

Amortization of

purchased intangibles

Restructuring

charges

Acquisition related

charges Non-GAAP

Revenue $30,036 $30,036

Cost of sales 23,313 23,313

Total OpEx 4,681 (466) (40) (22) 4,153

Operating profit 2,042 466 40 22 2,570

Interest & other, net (221) (221)

Pre-tax earnings 1,821 466 40 22 2,349

Income tax

353 136 22 6 517

Tax rate 19.4% 22.0%

Net earnings $1,468 $1,832

EPS $0.73 $0.92

Page 17: HP Q1 FY12 Earnings Announcement

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© Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.

17

Gross cash & net cash

1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12

Gross cash $13.7 $14.3 $14.8 $11.0 $10.0 $12.8 $13.0 $8.1 $8.2

Net cash ($1.8) ($3.0) ($4.7) ($10.6) ($9.9) ($9.7) ($12.2) ($22.0) ($22.2)

Net cash excl. HPFS Debt $6.6 $5.6 $4.0 ($1.5) ($0.4) $0.2 ($2.1) ($11.7) ($11.8)

-$25.0

-$20.0

-$15.0

-$10.0

-$5.0

$0.0

$5.0

$10.0

$15.0

1. Includes cash and cash equivalents, short-term investments, and certain liquid long-term investments

2. Net cash is defined as gross cash less total company debt including the effect of hedging

3. Net cash excl HPFS debt = HP net cash plus HPFS net debt

In billions

(1)

(3)

(2)

Page 18: HP Q1 FY12 Earnings Announcement

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© Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.

18

Cash flow

$14.6

$13.4

$11.9 $12.6

$3.1

$1.2

$12.0

$10.2

$8.4 $9.1

$2.7

$0.4

$0.0

$2.0

$4.0

$6.0

$8.0

$10.0

$12.0

$14.0

$16.0

FY08 FY09 FY10 FY11 Q1 FY11 Q1 FY12

Cash flow from operations Free cash flow

In billions

1. Free cash flow = cash flow from operations less net capital expenditures

(1)

Page 19: HP Q1 FY12 Earnings Announcement

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© Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.

19

Stock repurchase

1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12

Stock repurchase $2.7 $1.8 $2.6 $4.0 $2.3 $2.7 $4.6 $0.5 $0.8

$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

$3.0

$3.5

$4.0

$4.5

$5.0

In billions

FY08 FY09 FY10 FY11 FY12 YTD

Stock repurchase $9.6 $5.1 $11.0 $10.1 $0.8

Shares received 216 132 240 262 29

0

50

100

150

200

250

300

$0

$2

$4

$6

$8

$10

$12

In billions

Quarterly trends FY08 – FY12

$10.0B remaining in stock

repurchase authorization at

the end of Q1 FY12

In millions

Page 20: HP Q1 FY12 Earnings Announcement

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© Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.

20

FY12 reclassification

In millions

Revised

Amount

Previously

Reported Variance In millions

Revised

Amount

Previously

Reported Variance

Net revenue $126,033 $126,033 $ - Net revenue $127,245 $127,245 $ -

Cost of sales 95,852 95,956 (104) Cost of sales 97,418 97,529 (111)

R&D 2,959 2,959 - R&D 3,254 3,254 -

SG&A 12,822 12,718 104 SG&A 13,577 13,466 111

Amortization of purchased

intangibles 1,484 1,484 -

Amortization of purchased

intangibles 1,607 1,607 -

Restructuring charges 1,144 1,144 - Restructuring charges 645 645 -

Acquisition related charges 293 293 - Acquisition related charges 182 182 -

Impairment of goodwill and

purchased intangible

assets

Impairment of goodwill and

purchased intangible

assets

885 885 -

Total cost 114,554 114,554 - Total cost 117,568 117,568 -

Earnings from operations 11,479 11,479 - Earnings from operations 9,677 9,677 -

Interest and other, net (505) (505) - Interest and other, net (695) (695) -

Earnings before tax 10,974 10,974 - Earnings before tax 8,982 8,982 -

Provision for taxes 2,213 2,213 - Provision for taxes 1,908 1,908 -

Net earnings $8,761 $8,761 $ - Net earnings $7,074 $7,074 $ -

FY10 FY11

In connection with organizational realignments implemented in the first quarter of fiscal 2012, certain costs previously reported as Cost of Sales have been reclassified as selling, General and Administrative expenses

to better align those costs with the functional areas that benefit from those expenditures.

Page 21: HP Q1 FY12 Earnings Announcement

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© Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.

21

FY12 inter-segment reclassification

In millions Segment

Revised

Amount

Previously

Reported Variance Segment

Revised

Amount

Previously

Reported Variance

Net Revenue Services $35,276 $35,529 $(253) Services $35,702 $35,954 $(252)

IPG 26,176 25,764 412 IPG 26,176 25,783 393

ESSN 20,246 20,356 (110) ESSN 22,064 22,241 (177)

Software 2,812 2,729 83 Software 3,367 3,217 150

Corporate

Investments 214 346 (132)

Corporate

Investments 208 322 (114)

Total 84,724 84,724 - Total 87,517 87,517 -

Operating Profit Services 5,714 5,661 53 Services 5,203 5,149 54

IPG 4,357 4,412 (55) IPG 3,927 3,973 (46)

ESSN 2,814 2,825 (11) ESSN 2,997 3,026 (29)

Software 787 782 5 Software 722 698 24

Corporate

Investments (358) (366) 8

Corporate

Investments (1,619) (1,616) (3)

Total $13,314 $13,314 $ - Total $11,230 $11,230 $ -

FY10 FY11

HP has reflected fiscal 2012 organizational realignments on a backward-looking basis to provide improved visibility and comparability.

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FY12 intra-segment reclassification

In millions Business Unit

Revised

Amount

Previously

Reported Variance Business Unit

Revised

Amount

Previously

Reported Variance

Net Revenue Infrastructure

Technology

Outsourcing

$14,974 $14,942 $32

Infrastructure

Technology

Outsourcing

$15,224 $15,189 $35

Technology Services 10,270 10,627 (357) Technology Services 10,542 10,879 (337)

Application &

Business Services 10,032 - 10,032

Application &

Business Services 9,936 - 9,936

Application

Services - 6,792 (6,792)

Application

Services - 6,852 (6,852)

Business Process

Outsourcing - 2,872 (2,872)

Business Process

Outsourcing - 2,672 (2,672)

Other Services - 296 (296) Other Services - 362 (362)

IPG Commercial

Hardware 5,981 5,569 412

IPG Commercial

Hardware 6,183 5,790 393

Networking 1,595 1,705 (110) Networking 2,392 2,569 (177)

Software 2,812 2,729 83 Software 3,367 3,217 150

Corp Investments 214 346 (132) Corp Investments 208 322 (114)

Total $45,878 $45,878 $ - Total $47,852 $47,852 $ -

FY10 FY11

HP has reflected fiscal 2012 organizational realignments on a backward-looking basis to provide improved visibility and comparability.

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Outlook

Full year FY12 guidance

GAAP EPS

At least $3.20

Non-GAAP EPS(2) At least $4.00

Q2 FY12 guidance

GAAP EPS

$0.68 – $0.71

Non-GAAP EPS(1) $0.88 – $0.91

1. Second quarter fiscal 2012 non-GAAP diluted EPS estimates exclude after-tax costs of approximately $0.20 per share, related primarily to the amortization of purchased intangible assets, restructuring charges and acquisition-related charges.

2. Full year fiscal 2012 non-GAAP diluted EPS estimates exclude after-tax costs of approximately $0.80 per share, related primarily to the amortization of purchased intangible assets, restructuring charges and acquisition-related charges.

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© Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.

Supplemental slides

24

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© Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.

25

Inventory & accounts receivable

1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12

Inventory $6.6 $6.4 $7.2 $6.5 $6.7 $6.8 $7.4 $7.5 $7.3

% of Rev 5.7% 5.4% 5.8% 5.1% 5.3% 5.3% 5.8% 5.9% 5.8%

$6.6 $6.4

$7.2

$6.5 $6.7 $6.8

$7.4 $7.5 $7.3

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

11.0%

$2.0

$3.0

$4.0

$5.0

$6.0

$7.0

$8.0

$9.0

1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12

Receivables $14.5 $14.8 $15.6 $18.5 $16.6 $18.6 $18.1 $18.2 $15.9

% of Rev 12.4% 12.3% 12.6% 14.7% 13.0% 14.6% 14.1% 14.3% 12.7%

$14.5 $14.8 $15.6

$18.5

$16.6

$18.6 $18.1 $18.2

$15.9

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

$0.0

$2.0

$4.0

$6.0

$8.0

$10.0

$12.0

$14.0

$16.0

$18.0

$20.0

Inventory Accounts receivable In billions In billions

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PP&E & accounts payable

1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12

Payables $13.6 $13.4 $14.9 $14.4 $13.5 $14.2 $14.5 $14.8 $12.4

$13.6 $13.4

$14.9

$14.4

$13.5

$14.2 $14.5

$14.8

$12.4

$5.0

$7.0

$9.0

$11.0

$13.0

$15.0

1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12

PP&E $11.2 $11.2 $11.5 $11.8 $11.6 $11.9 $12.0 $12.3 $12.1

% of Rev 9.5% 9.3% 9.3% 9.3% 9.1% 9.3% 9.3% 9.7% 9.7%

$11.2 $11.2 $11.5

$11.8 $11.6 $11.9 $12.0

$12.3 $12.1

4%

6%

8%

10%

12%

$5.0

$7.0

$9.0

$11.0

$13.0

In billions In billions

Net PP&E Accounts payable

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Working capital metrics

1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12

Days receivables 42 43 46 50 46 53 52 51 48

Days inventory 25 25 28 23 25 26 28 27 28

Days payable 51 51 57 52 50 54 54 52 48

20

30

40

50

60

Days

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28

HPFS supplemental data

1. Depreciation and net capital expenditures are shown net of inter-company eliminations.

In millions Q1 FY12 Q1 FY11 Q4 FY11

Depreciation (1)

$457 $404 $448

Net capital expenditures (1)

$430 $465 $585

Sequential increase in net financing

receivables $7 $143 $63

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FY11 GAAP to non-GAAP bridge

In millions except

per share amounts GAAP

webOS

hardware

wind down

Impair. of goodwill

and purchased

intangible assets

Amort. of

purchased

intangibles

Restructuring

charges

Acquisition

related charges Non-GAAP

Revenue $127,245 142 $127,387

Cost of sales 97,418 (548) 96,870

Total OpEx 20,150 (65) (885) (1,607) (645) (182) 16,766

Operating profit 9,677 755 885 1,607 645 182 13,751

Interest & other, net (695) 276 (419)

Pre-tax earnings 8,982 755 885 1,607 645 458 13,332

Income tax

1,908 198 25 489 198 135 2,953

Tax rate 21.2% 22.1%

Net earnings $7,074 $10,379

EPS $3.32 $4.88

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Q4 FY11 GAAP to non-GAAP bridge

In millions except

per share amounts GAAP

webOS

hardware

wind down

Impair. of goodwill

and purchased

intangible assets

Amort. of

purchased

intangibles

Restructuring

charges

Acquisition

related charges Non-GAAP

Revenue $32,122 142 $32,264

Cost of sales 25,304 (548) 24,756

Total OpEx 6,023 (65) (885) (411) (179) (114) 4,369

Operating profit 795 755 885 411 179 114 3,139

Interest & other, net (401) 276 (125)

Pre-tax earnings 394 755 885 411 179 390 3,014

Income tax

155 198 25 127 47 112 664

Tax rate 39.3% 22.0%

Net earnings $239 $2,350

EPS $0.12 $1.17

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Q3 FY11 GAAP to non-GAAP bridge

In millions except

per share amounts GAAP

Amort. of Purchased Intangibles Restructuring

Acquisition related charges Non-GAAP

Revenue $31,189 $31,189

Cost of sales 23,901 23,901

Total OpEx 4,768 (358) (150) (18) 4,242

Operating profit 2,520 358 150 18 3,046

Interest & other, net (121) (121)

Pre-tax earnings 2,399 358 150 18 2,925

Income tax

473 108 56 6 643

Tax rate 19.7% 22.0%

Net earnings $1,926 $2,282

EPS $0.93 $1.10

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Q2 FY11 GAAP to non-GAAP bridge

In millions except

per share amounts GAAP

Amort. of Purchased Intangibles Restructuring

Acquisition related charges Non-GAAP

Revenue $31,632 $31,632

Cost of sales 23,832 23,832

Total OpEx 4,832 (413) (158) (21) 4,240

Operating profit 2,968 413 158 21 3,560

Interest & other, net (76) (76)

Pre-tax earnings 2,892 413 158 21 3,484

Income tax

588 126 46 7 767

Tax rate 20.3% 22.0%

Net earnings $2,304 $2,717

EPS $1.05 $1.24

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Q1 FY11 GAAP to non-GAAP bridge

In millions except

per share amounts GAAP

Amort. of Purchased Intangibles Restructuring

Acquisition related charges Non-GAAP

Revenue $32,302 $32,302

Cost of sales 24,381 24,381

Total OpEx 4,527 (425) (158) (29) 3,915

Operating profit 3,394 425 158 29 4,006

Interest & other, net (97) (97)

Pre-tax earnings 3,297 425 158 29 3,909

Income tax

692 129 48 10 879

Tax rate 21.0% 22.5%

Net earnings 2,605 3,030

EPS $1.17 $1.36

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FY10 GAAP to non-GAAP bridge

In millions except

per share amounts GAAP

Amort. of Purchased Intangibles Restructuring

Acquisition related charges Non-GAAP

Revenue $126,033 $126,033

Cost of sales 95,852 95,852

Total OpEx 18,702 (1,484) (1,144) (293) 15,781

Operating profit 11,479 1,484 1,144 293 14,400

Interest & other, net (505) (505)

Pre-tax earnings 10,974 1,484 1,144 293 13,895

Income tax

2,213 391 342 83 3,029

Tax rate 20.2% 21.8%

Net earnings 8,761 10,866

EPS $3.69 $4.58

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Q4 FY10 GAAP to non-GAAP bridge

In millions except

per share amounts GAAP

Amort. of Purchased Intangibles Restructuring

Acquisition related charges Non-GAAP

Revenue $33,278 $33,278

Cost of sales 24,968 24,968

Total OpEx 5,015 (424) (235) (51) 4,305

Operating profit 3,295 424 235 51 4,005

Interest & other, net (81) (81)

Pre-tax earnings 3,214 424 235 51 3,924

Income tax

676 98 68 18 860

Tax rate 21.0% 21.9%

Net earnings 2,538 3,064

EPS $1.10 $1.33

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Q3 FY10 GAAP to non-GAAP bridge

In millions except

per share amounts GAAP

Amort. of Purchased Intangibles Restructuring

Acquisition related charges Non-GAAP

Revenue $30,729 $30,729

Cost of sales 23,340 23,340

Total OpEx 5,066 (383) (598) (127) 3,958

Operating profit 2,323 383 598 127 3,431

Interest & other, net (134) (134)

Pre-tax earnings 2,189 383 598 127 3,297

Income tax

416 100 175 31 722

Tax rate 19.0% 21.9%

Net earnings 1,773 2,575

EPS $0.75 $1.08

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Q2 FY10 GAAP to non-GAAP bridge

In millions except

per share amounts GAAP

Amort. of Purchased Intangibles Restructuring

Acquisition related charges Non-GAAP

Revenue $30,849 $30,849

Cost of sales 23,542 23,542

Total OpEx 4,449 (347) (180) (77) 3,845

Operating profit 2,858 347 180 77 3,462

Interest & other, net (91) (91)

Pre-tax earnings 2,767 347 180 77 3,371

Income tax

567 92 57 22 738

Tax rate 20.5% 21.9%

Net earnings 2,200 2,633

EPS $0.91 $1.09

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Q1 FY10 GAAP to non-GAAP bridge

In millions except

per share amounts GAAP

Amort. of Purchased Intangibles Restructuring

Acquisition related charges Non-GAAP

Revenue $31,177 $31,177

Cost of sales 24,002 24,002

Total OpEx 4,172 (330) (131) (38) 3,673

Operating profit 3,003 330 131 38 3,502

Interest & other, net (199) (199)

Pre-tax earnings 2,804 330 131 38 3,303

Income tax

554 101 42 12 709

Tax rate 19.8% 21.5%

Net earnings 2,250 2,594

EPS $0.93 $1.07

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FY09 GAAP to non-GAAP bridge

In millions except

per share amounts GAAP

Amort. of Purchased Intangibles Restructuring

Acquisition related charges Non-GAAP

Revenue $114,552 $114,552

Cost of sales 87,489 87,489

Total OpEx 16,927 (1,578) (640) (242) 14,467

Operating profit 10,136 1,578 640 242 12,596

Interest & other, net (721) (721)

Pre-tax earnings 9,415 1,578 640 242 11,875

Income tax

1,755 451 197 79 2,482

Tax rate 18.6% 20.9%

Net earnings 7,660 9,393

EPS $3.14 $3.85

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Q4 FY09 GAAP to non-GAAP bridge

In millions except

per share amounts GAAP

Amort. of Purchased Intangibles Restructuring

Acquisition related charges Non-GAAP

Revenue $30,777 $30,777

Cost of sales 23,466 23,466

Total OpEx 4,178 (401) (38) (60) 3,679

Operating profit 3,133 401 38 60 3,632

Interest & other, net (132) (132)

Pre-tax earnings 3,001 401 38 60 3,500

Income tax

589 117 11 19 736

Tax rate 19.6% 21.0%

Net earnings 2,412 2,764

EPS $0.99 $1.14

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41

Q3 FY09 GAAP to non-GAAP bridge

In millions except

per share amounts GAAP

Amort. of Purchased Intangibles Restructuring

Acquisition related charges Non-GAAP

Revenue $27,585 $27,585

Cost of sales 21,022 21,022

Total OpEx 4,350 (379) (362) (59) 3,550

Operating profit 2,213 379 362 59 3,013

Interest & other, net (177) (177)

Pre-tax earnings 2,036 379 362 59 2,836

Income tax

365 105 108 19 597

Tax rate 17.9% 21.1%

Net earnings 1,671 2,239

EPS $0.69 $0.92

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Q2 FY09 GAAP to non-GAAP bridge

In millions except

per share amounts GAAP

Amort. of Purchased Intangibles Restructuring

Acquisition related charges Non-GAAP

Revenue $27,383 $27,383

Cost of sales 20,937 20,937

Total OpEx 4,153 (380) (94) (75) 3,604

Operating profit 2,293 380 94 75 2,842

Interest & other, net (180) (180)

Pre-tax earnings 2,113 380 94 75 2,662

Income tax

392 112 31 24 559

Tax rate 18.6% 21.0%

Net earnings 1,721 2,103

EPS $0.71 $0.86

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Q1 FY09 GAAP to non-GAAP bridge

In millions except

per share amounts GAAP

Amort. of Purchased Intangibles Restructuring

Acquisition related charges Non-GAAP

Revenue $28,807 $28,807

Cost of sales 22,064 22,064

Total OpEx 4,246 (418) (146) (48) 3,634

Operating profit 2,497 418 146 48 3,109

Interest & other, net (232) (232)

Pre-tax earnings 2,265 418 146 48 2,877

Income tax

409 117 47 17 590

Tax rate 18.1% 20.5%

Net earnings 1,856 2,287

EPS $0.75 $0.93