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HP 4Q10 Earnings Report
HP 4Q10 Earnings Report
HP 4Q10 Earnings Report
HP 4Q10 Earnings Report
HP 4Q10 Earnings Report
HP 4Q10 Earnings Report
HP 4Q10 Earnings Report
HP 4Q10 Earnings Report
HP 4Q10 Earnings Report
HP 4Q10 Earnings Report
HP 4Q10 Earnings Report
HP 4Q10 Earnings Report
HP 4Q10 Earnings Report
HP 4Q10 Earnings Report
HP 4Q10 Earnings Report
HP 4Q10 Earnings Report
HP 4Q10 Earnings Report
HP 4Q10 Earnings Report
HP 4Q10 Earnings Report
HP 4Q10 Earnings Report
HP 4Q10 Earnings Report
HP 4Q10 Earnings Report
HP 4Q10 Earnings Report
HP 4Q10 Earnings Report
HP 4Q10 Earnings Report
HP 4Q10 Earnings Report
HP 4Q10 Earnings Report
HP 4Q10 Earnings Report
HP 4Q10 Earnings Report
HP 4Q10 Earnings Report
HP 4Q10 Earnings Report
HP 4Q10 Earnings Report
HP 4Q10 Earnings Report
HP 4Q10 Earnings Report
HP 4Q10 Earnings Report
HP 4Q10 Earnings Report
HP 4Q10 Earnings Report
HP 4Q10 Earnings Report
HP 4Q10 Earnings Report
HP 4Q10 Earnings Report
HP 4Q10 Earnings Report
HP 4Q10 Earnings Report
HP 4Q10 Earnings Report
HP 4Q10 Earnings Report
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HP 4Q10 Earnings Report

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  • 1. HP Q FY10 Earnings Q4 10 Announcement November 22, 2010 http://www.hp.com/investor/home p p November 22, 2010 http://www.hp.com/investor/home
  • 2. FORWARD LOOKING STATEMENTS This presentation may contain forward-looking statements that involve risks, uncertainties and assumptions. If the risks or uncertainties ever materialize or the assumptions prove incorrect, the financial results of HP may differ materially from those expressed or implied by such forward-looking statements 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 revenue margins, expenses, earnings, share, provisions, flows, obligations, 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 execution of cost reduction programs and restructuring 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 assets, 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 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, 2009 and HP’s other filings with the Securities and Exchange Commission, including HP’s Quarterly Report on Form 10-Q HP s HP s 10 Q for the fiscal quarter ended July 31, 2010. 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-K for the fiscal year ended October 31, 2010. In particular, determining HP’s actual tax balances and provisions as of October 31, 2010 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-K. HP assumes no obligation and does not intend to update these forward-looking statements. 2 November 22, 2010 http://www.hp.com/investor/home
  • 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 HP’s management uses non GAAP operating expense, non GAAP OI&E, non-GAAP operating profit, non GAAP net earnings, non- non-GAAP expense non-GAAP OI&E non GAAP profit non-GAAP 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 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 share. 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 h GAAP fi i l t th t di tl bl d i t t i f ll 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 HP s management to evaluate and measure such performance. 3 November 22, 2010 http://www.hp.com/investor/home
  • 4. KEY MESSAGES Strong revenue growth of 10% in FY10, up $11.5 billion year over year Four consecutive quarters of year-over-year revenue growth of 8% or greater Q4 net revenue of $33.3 billion, up 8.1% year over year, with a negative currency impact of 0.7 points Continued non-GAAP operating margin expansion driven by higher gross margins Q4 non-GAAP operating margins of 12%, up 80 basis points sequentially and 20 basis points year over year Expanded Q4 gross margins by 110 basis points year over year, driven primarily by more profitable mix Investing in growth and efficiencies Increased Q4 investments in R&D and Sales, with non-GAAP OpEx up 16% year over year and 9% sequentially Announced and closed four acquisitions in Q4 – 3PAR, ArcSight, Fortify and Stratavia Continued investments in supply chain, services transformation, and other operational efficiencies to drive future pp y , , p savings Continued momentum in the enterprise, led by strength in converged infrastructure solutions Winning in the datacenter with ISS up 32%, BCS up 10%, and Storage up 14% year over year in Q4 Accelerated HP Networking growth i Q4 with P C A l t d N t ki th in Q4, ith ProCurve up 50% year over year and 3C d 3Com revenue ahead of plan h d f l IPG expanding its market leadership Share gains in both laser and ink Total printer hardware units up 14% y p p year over y year in Q4 with commercial p printer units up 43% p Supplies growth of 6% year over year 4 November 22, 2010 http://www.hp.com/investor/home
  • 5. Q4 FY10 RESULTS OVERVIEW Financial –Net revenue of $33.3B, up 8% Y/Y and up 9% Y/Y in constant currency –Non-GAAP(1) diluted EPS of $1.33, up 17% Y/Y Summary –GAAP diluted EPS of $1.10, up 11% Y/Y –Cash flow from operations of $3.2B Cash $3 2B –$4.0B in share repurchases and $181M in dividends OP OP $ OP % $ in millions Q4 Revenue Growth Y/Y% OP $ % of rev Y/Y Y/Y Services $8,963 0% $1,497 16.7% $53 0.5 pts Enterprise Storage and Servers $5,269 25% $730 13.9% $249 2.5 pts HP Software $974 1% $247 25.4% $13 1.2 pts Enterprise Business $15,206 8% $2,474 16.3% $315 1.0 pts Personal S t P l Systems Group G $10,283 $10 283 4% $568 5.5% 5 5% $108 0.8 t 0 8 pts Imaging and Printing Group $6,995 8% $1,220 17.4% $49 (0.7) pts HP Financial Services $809 11% $73 9.0% $7 (0.1) pts Total HP (2) $33,278 , 8% $4,005 (1) , 12.0% (1) $373(1) 0.2 pts (1) 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 18 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 5 November 22, 2010 http://www.hp.com/investor/home
  • 6. FY10 RESULTS OVERVIEW Financial –Net revenue of $126.0B, up 10% Y/Y and up 8% Y/Y in constant currency –Non-GAAP(1) diluted EPS of $4.58, up 19% Y/Y Summary –GAAP diluted EPS of $3.69, up 18% Y/Y –Cash flow from operations of $11.9B Cash $11 9B –$11.0B in share repurchases and $771M in dividends FY10 OP OP $ OP % $ in millions Revenue Growth Y/Y% OP $ % of rev Y/Y Y/Y Services $34,935 1% $5,609 16.1% $565 1.6 pts Enterprise Storage and Servers $18,651 $18 651 21% $2,402 $2 402 12.9% 12 9% $884 3.0 3 0 pts HP Software $3,586 0% $759 21.2% $75 2.1 pts Enterprise Business $57,172 7% $8,770 15.3% $1,524 1.8 pts Personal Systems Group y p $ , $40,741 15% $ , $2,032 5.0% $ $371 0.3 pts p Imaging and Printing Group $25,764 7% $4,412 17.1% $102 (0.9) pts HP Financial Services $3,047 14% $281 9.2% $75 1.5 pts Total HP (2) $126,033 10% $14,400 (1) 11.4% (1) $1,804(1) 0.4 pts (1) 1. All non-GAAP numbers have been adjusted to exclude certain items. A reconciliation of specific adjustments to GAAP results for this fiscal year and prior periods is included on slide 19 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 6 November 22, 2010 http://www.hp.com/investor/home
  • 7. Q4 FY10 REVENUE By Segment By Region U.S. Imaging & 36% Printing Group P i ti G Services 21% 27% EMEA Americas 37%, 46%, up 10% Y/Y up 6% Y/Y Enterprise Canada/ Personal Latin America Systems Storage & 10% Group Servers 16% Asia Pacific 31% 17%, 17% up 8% Y/Y HP Financial HP Software & Services & Other Solutions 3% 2% 7 November 22, 2010 http://www.hp.com/investor/home
  • 8. REVENUE & EPS PERFORMANCE $36 $1.40 $34 $ $1.30 $1 30 $1.20 $32 $1.10 $30 $1.00 $28 $0.90 $0 90 $26 $0.80 $24 $0.70 $22 $0.60 $0.50 $0 50 $20 $0.40 $18 $0.30 $16 $0.20 $14 $0.10 $12 $0.00 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 Revenue (in billions) $28.3 $28.5 $28.3 $28.0 $33.6 $28.8 $27.4 $27.6 $30.8 $31.2 $30.8 $30.7 $33.3 Non-GAAP EPS $0.86 $0.86 $0.87 $0.86 $1.03 $0.93 $0.86 $0.92 $1.14 $1.07 $1.09 $1.08 $1.33 8 November 22, 2010 http://www.hp.com/investor/home
  • 9. REGIONAL REVENUE TRENDS Americas United States (including U.S.) $16 20% $12 20% evenue growth % Y/ Y revenue growth % $14 15% $10 15% $ in billions $ in billions $12 10% $8 10% $10 5% $6 5% Y/ Y re r $8 0% $4 0% $6 (5%) $2 (5%) 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 $15 EMEA 30% $8 Asia Pacific 25% Y/ Y revenue growth % Y/ Y revenue growth % $12 20% $6 15% ons ons $9 10% $ in billio g $ in billio $4 5% $6 0% $2 (5%) $3 (10%) $0 (20%) $0 (15%) 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 Y/Y revenue growth % 9 November 22, 2010 http://www.hp.com/investor/home Y/Y constant currency revenue growth %
  • 10. REVENUE GROWTH 25% 20% wth % Y/Y re revenue gr (%) rowth 15% evenue grow 10% 5% Y/Y Y 0% (5%) (10%) 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 Constant currency 11.2% 8.2% 4.5% 4.7% 15.6% 4.2% 2.9% 4.0% -5.0% 5.4% 8.4% 10.6% 8.8% As reported 15.2% 13.5% 10.7% 10.5% 18.8% 1.2% -3.1% -1.6% -8.4% 8.2% 12.7% 11.4% 8.1% 10 November 22, 2010 http://www.hp.com/investor/home
  • 11. SERVICES In billions Revenue In millions Operating profit $10.0 $1,600 18% $1,400 16% $8.0 $ $1,200 14% O P % revenue $6.0 $1,000 12% $800 10% $4.0 $600 8% $400 6% $2.0 $200 4% $0.0 $0 2% 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 Q Q Q Q Q Q Q Q Q 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 Q4 FY10 revenue by business • Services revenue of $9.0B, up 0.4% Y/Y 8% IT • Operating profit of $1.5B; 16.7% of revenue O Technology • ITO revenue up 1% Y/Y 18% Services Application Services • Technology Services revenue up 1% Y/Y BPO • Application Services revenue up 1% Y/Y • BPO revenue down 11% Y/Y (down 4% Y/Y, ( 46% excluding the ExcellerateHRO divestiture) 28% 11 November 22, 2010 http://www.hp.com/investor/home
  • 12. ENTERPRISE STORAGE & SERVERS (ESS) In billions Revenue In millions Operating profit $6.0 $800 16% $700 14% $5.0 $5 0 $600 12% $4.0 O P % revenue $500 10% $3.0 $400 8% $300 6% $2.0 $200 4% $1.0 $100 2% $0 0% $0.0 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 Q4 FY10 revenue by business • ESS revenue of $5.3B, up 25% Y/Y • Operating profit of $730M, 13.9% of revenue 20% Industry Standard • ISS revenue up 32% Y/Y Servers (ISS) Business Critical • BCS revenue up 10% Y/Y Systems (BCS) Storage Works • Storage revenue up 14% Y/Y, mid-range 13% Division (SWD) storage arrays (EVA) down 4% Y/Y • ESS Blades revenue up 51% Y/Y 67% 12 November 22, 2010 http://www.hp.com/investor/home
  • 13. HP SOFTWARE In millions Revenue In millions Operating profit $1,200 $300 30% $1,000 $ $250 25% O P % revenue $800 $200 20% $600 $150 15% $400 $100 10% $200 $50 5% $0 $0 0% 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 Q4 FY10 revenue by business • Software revenue of $974M, up 1% Y/Y • Operating profit of $247M, 25.4% of revenue Business 30% Technology • Business Technology Optimization revenue Optimization up 4% Y/Y Other Software • Other Software revenue down 6% Y/Y 70% 13 November 22, 2010 http://www.hp.com/investor/home
  • 14. PERSONAL SYSTEMS GROUP (PSG) In billions Revenue In millions Operating profit $12.0 $700 7% $10.0 $10 0 $600 6% $500 5% $8.0 OP % revenue $400 4% $6.0 $300 3% P $4.0 $200 2% $2.0 $100 1% $0.0 $0 0% 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 Q4 FY10 revenue by business • PSG revenue of $10.3B, up 4% Y/Y 2% Notebooks • Operating profit of $568M, 5.5% of revenue Desktops • Total units up 2% Y/Y 5% Workstations Other • Notebook revenue down 3%, units down 3% Y/Y • Desktop revenue up 13%, units up 9% Y/Y • Consumer client revenue down 10% Y/Y, 55% Commercial client revenue up 20% Y/Y 38% 14 November 22, 2010 http://www.hp.com/investor/home
  • 15. IMAGING & PRINTING GROUP (IPG) In billions Revenue In millions Operating profit $8.0 $1,300.0 22% $6.0 $1,100.0 18% OP % of revenue $4.0 $900.0 14% $2.0 $700.0 10% $0.0 $500.0 6% 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 Q4 FY10 revenue by business • IPG revenue of $7.0B, up 8% Y/Y 11% • Operating profit of $1.2B, 17.4% of revenue Supplies Commercial • Supplies revenue up 6% Y/Y pp p Consumer • Total printer hardware units up 14% Y/Y, 22% Consumer printer hardware units up 7% Y/Y, Commercial printer hardware units up 43% Y/Y • Color LaserJet units up 3% Y/Y • Printer-based MFP units up 83% Y/Y 67% • Indigo digital press page volume up 24% Y/Y 15 November 22, 2010 http://www.hp.com/investor/home
  • 16. HP FINANCIAL SERVICES (HPFS) In millions Revenue In millions Operating profit $1,000 $75 10% $800 $60 8% OP %revenue $600 $45 6% $400 $30 4% O $200 $15 2% $0 $0 0% 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 Q4 FY10 revenue by region • HPFS revenue of $809M, up 11% Y/Y 12% Americas • Operating profit of $73M, 9.0% of revenue EMEA • Financing volume up 11% Y/Y Asia Pacific • Net portfolio assets of $11.2B, up 14% Y/Y 29% 59% 16 November 22, 2010 http://www.hp.com/investor/home
  • 17. (1) Non-GAAP FINANCIAL INFORMATION In millions except per share amounts Q4 FY10 Q3 FY10 Q4 FY09 Revenue $33,278 100% $30,729 100% $30,777 100% Cost of sales 25,024 , 75.2% 23,402 , 76.2% 23,475 , 76.3% Total OpEx 4,249 12.8% 3,896 12.6% 3,670 11.9% Operating profit 4,005 12.0% 3,431 11.2% 3,632 11.8% Interest & other, net (81) (134) (132) Pre-tax earnings 3,924 11.8% 3,297 10.7% 3,500 11.4% Income tax 860 722 736 Net Earnings 3,064 9.2% 2,575 8.4% 2,764 9.0% EPS $1.33 $1.08 $1.14 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 18 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 non-GAAP presentation. HP s non-GAAP provided on slide 3 under “Use of non-GAAP Financial Information.” 17 November 22, 2010 http://www.hp.com/investor/home
  • 18. Q4 FY10 GAAP to non-GAAP BRIDGE Amort. of In millions except Purchased Acquisition related per share amounts GAAP Intangibles Restructuring charges Non-GAAP Revenue $33,278 $33,278 Cost of sales 25,024 25,024 Total Op ota OpEx 4,959 ,959 (424) (235) (51) 4,249 , 9 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 0% 21.9% 21 9% Net earnings 2,538 3,064 EPS $1.10 $1.33 18 November 22, 2010 http://www.hp.com/investor/home
  • 19. FY10 GAAP to non-GAAP BRIDGE Amort. of Acquisition In millions except Purchased related per share amounts GAAP Intangibles Restructuring charges Non-GAAP Non GAAP Revenue $126,033 $126,033 Cost of sales 96,089 96,089 Total OpEx 18,465 (1,484) (1,144) (293) 15,544 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 Ta rate 20.2% 20 2% 21.8% 21 8% Net earnings 8,761 10,866 EPS $3.69 $4.58 19 November 22, 2010 http://www.hp.com/investor/home
  • 20. GROSS CASH & NET CASH In billions $15.0 $10.0 $5.0 $0.0 ($5.0) ($10.0) ($15.0) ($15 0) 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 (1) Gross cash $10.3 $11.3 $13.0 $13.7 $13.4 $13.7 $14.3 $14.8 $11.0 (2) N et cash ($7.4) ($8.7) ($5.3) ($3.2) ($2.1) ($1.8) ($3.0) ($4.7) ($10.6) (3) N et cash excl HPFS Debt excl. ($0.5) ($0 5) ($1.8) ($1 8) $1.8 $1 8 $4.3 $4 3 $6.0 $6 0 $6.6 $6 6 $5.6 $5 6 $4.0 $4 0 ($1.5) ($1 5) 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 20 November 22, 2010 http://www.hp.com/investor/home
  • 21. CASH FLOW In billions $16.0 $14.6 $13.4 $14.0 $12.0 $11.9 $11.4 $12.0 $10.2 $9.4 $9.6 $10.0 $8.4 $8.0 $7.1 $6.0 $4.0 $2.0 $0.0 FY06 FY07 FY08 FY09 FY10 Cash flow from operations Free cash flow (1 ) 1. Free cash flow = cash flow from operations less net capital expenditures 21 November 22, 2010 http://www.hp.com/investor/home
  • 22. STOCK REPURCHASE Quarterly trends FY06 – FY10 In billions In billions In millions $4.0 $10.9B $10 9B remaining in stock $12 300 repurchase authorization at the end of Q4 FY10 $3.5 $10 250 $3.0 $3 0 $8 200 $2.5 $6 150 $2.0 $1.5 $4 100 $1.0 $2 50 $0.5 $0 0 FY06(1) FY07 (1 ) FY08 FY09 FY10 $0.0 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 Stock repurchase $7.2 $11.5 $9.6 $5.1 $11.0 Stock repurchase $1.9 $1.2 $0.8 $1.0 $2.1 $2.7 $1.8 $2.6 $4.0 Shares received 224 271 216 132 240 1. In Q1 FY06, HP entered into a prepaid variable share purchase program. $1.7 billion in cash was used in Q1 FY06 to fully fund this plan. See our Form 10-Q for the period ended January 31, 2006 for more information. HP completed all repurchases under this plan in March 2007 and received a total of 53M shares. 22 November 22, 2010 http://www.hp.com/investor/home
  • 23. OUTLOOK Q1 FY11 guidance Revenue $32.8B $33.0B $32 8B – $33 0B GAAP EPS $1.06 - $1.08 Non GAAP EPS(1) Non-GAAP $1.28 $1.30 $1 28 – $1 30 Full year FY11 guidance Revenue $132.0B $133.5B $132 0B - $133 5B GAAP EPS $4.42 – $4.52 Non GAAP EPS(2)) Non-GAAP ( $5.16 $5.26 $5 16 – $5 26 1. Q1 FY11 non-GAAP diluted earnings per share estimates exclude after-tax costs of approximately $0.22 per share, related primarily to the amortization of purchased intangible assets, restructuring charges and acquisition related charges assets acquisition-related charges. 2. Full year FY11 non-GAAP diluted earnings per share estimates exclude after-tax costs of approximately $0.74 per share, related primarily to the amortization of purchased intangible assets, restructuring charges and acquisition-related charges. 23 November 22, 2010 http://www.hp.com/investor/home
  • 24. SUPPLEMENTAL SLIDES November 22, 2010 http://www.hp.com/investor/home
  • 25. INVENTORY & ACCOUNTS RECEIVABLE Inventory Accounts receivable In billions In billions $9.0 11.0% $20.0 20.0% $18.5 $7.9 $18.0 $16.9 18.0% $8.0 10.0% $16.5 $7.6 $7.2 $ $16.0 $16 0 $14.7 $14 7 $15.6 $15 6 16.0% 16 0% $14.8 $14.7 $14.5 $14.8 $7.0 $6.6 9.0% $14.0 14.0% $6.4 $6.5 $6.1 $5.9 $12.0 12.0% $6.0 $5.7 8.0% $10.0 $10 0 10.0% 10 0% $5.0 7.0% $8.0 8.0% $4.0 6.0% $6.0 6.0% $4.0 $4 0 4.0% 4 0% $3.0 5.0% $2.0 2.0% $2.0 4.0% $0.0 0.0% 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 Inventory e to y $7.9 $7.6 $5.7 $5.9 $6.1 $6.6 $6.4 $7.2 $6.5 Receivables $16.9 $14.8 $14.7 $14.7 $16.5 $14.5 $14.8 $15.6 $18.5 % of Rev 6.7% 6.4% 4.9% 5.0% 5.3% 5.7% 5.4% 5.8% 5.1% % of Rev 14.3% 12.4% 12.4% 12.6% 14.4% 12.4% 12.3% 12.6% 14.7% 25 November 22, 2010 http://www.hp.com/investor/home
  • 26. PP&E & ACCOUNTS PAYABLE Net PP&E Accounts payable In billions In billions $14.9 $14.8 $14.9 $13.0 12% $15.0 $14.4 $11.8 $13.6 $13.4 $11.5 $11.2 $11.3 $11.2 $11.2 $12.8 $13.0 $13 0 $10.8 $10.8 $10.8 $11.0 10% $11.8 $11.4 $11.0 $9.0 $9 0 8% $9.0 $7.0 6% $7.0 $5.0 4% 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 $5.0 PP&E $10.8 $10.8 $10.8 $11.2 $11.3 $11.2 $11.2 $11.5 $11.8 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 % of Rev 9.2% 9 2% 9.1% 9 1% 9.2% 9 2% 9.5% 9 5% 9.8% 9 8% 9.5% 9 5% 9.3% 9 3% 9.3% 9 3% 9.3% 9 3% Payables $14.9 $11.8 $11.4 $12.8 $14.8 $13.6 $13.4 $14.9 $14.4 26 November 22, 2010 http://www.hp.com/investor/home
  • 27. WORKING CAPITAL METRICS Days 60 50 40 30 20 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 Days receivables 45 46 48 48 48 42 43 46 50 Days inventory y y 27 31 25 25 23 25 25 28 23 Days payable 52 48 49 55 57 51 51 57 52 27 November 22, 2010 http://www.hp.com/investor/home
  • 28. HPFS SUPPLEMENTAL DATA In millions Q4 FY10 Q4 FY09 Q3 FY10 Depreciation (1) $376 $316 $351 Net capital expenditures (1) $539 $471 $521 Sequential increase (decrease) in net financing receivables $433 $360 $(7) 1. Depreciation and net capital expenditures are shown net of inter-company eliminations. 28 November 22, 2010 http://www.hp.com/investor/home
  • 29. Q3 FY10 GAAP to non-GAAP BRIDGE Amort. of In millions except Purchased Acquisition related per share amounts GAAP Intangibles Restructuring charges Non-GAAP Non GAAP Revenue $30,729 $30,729 Cost of sales 23,402 23,402 Total OpEx 5,004 (383) (598) (127) 3,896 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 29 November 22, 2010 http://www.hp.com/investor/home
  • 30. Q2 FY10 GAAP to non-GAAP BRIDGE Amort. of In millions except Purchased Acquisition related per share amounts GAAP Intangibles Restructuring charges Non-GAAP Non GAAP Revenue $30,849 $30,849 Cost of sales 23,601 23,601 Total OpEx 4,390 (347) (180) (77) 3,786 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 30 November 22, 2010 http://www.hp.com/investor/home
  • 31. Q1 FY10 GAAP to non-GAAP BRIDGE Amort. of In millions except Purchased Acquisition related per share amounts GAAP Intangibles Restructuring charges Non-GAAP Non GAAP Revenue $31,177 $31,177 Cost of sales 24,062 24,062 Total OpEx 4,112 (330) (131) (38) 3,613 Operating profit 3,003 330 131 38 3,502 Interest & other, net I t t th t (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 31 November 22, 2010 http://www.hp.com/investor/home
  • 32. FY09 GAAP to non-GAAP BRIDGE Amort. of In millions except Purchased Acquisition related per share amounts GAAP Intangibles Restructuring charges Non-GAAP Non GAAP Revenue $114,552 $114,552 Cost of sales 87,524 87,524 Total OpEx 16,892 (1,578) (640) (242) 14,432 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 Ta rate 18.6% 18 6% 20.9% 20 9% Net earnings 7,660 9,393 EPS $3.14 $3.85 32 November 22, 2010 http://www.hp.com/investor/home
  • 33. Q4 FY09 GAAP to non-GAAP BRIDGE Amort. of In millions except Purchased Acquisition related per share amounts GAAP Intangibles Restructuring charges Non-GAAP Non GAAP Revenue $30,777 $30,777 Cost of sales 23,475 23,475 Total OpEx 4,169 (401) (38) (60) 3,670 Operating profit 3,133 401 38 60 3,632 Interest & other, net I t t th t (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 $0 99 $1.14 $1 14 33 November 22, 2010 http://www.hp.com/investor/home
  • 34. Q3 FY09 GAAP to non-GAAP BRIDGE Amort. of In millions except Purchased Acquisition related per share amounts GAAP Intangibles Restructuring charges Non-GAAP Non GAAP Revenue $27,585 $27,585 Cost of sales 21,031 21,031 Total OpEx 4,341 (379) (362) (59) 3,541 Operating profit 2,213 379 362 59 3,013 Interest & other, net I t t th t (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 69 $0.92 $0 92 34 November 22, 2010 http://www.hp.com/investor/home
  • 35. Q2 FY09 GAAP to non-GAAP BRIDGE Amort. of In millions except Purchased Acquisition related per share amounts GAAP Intangibles Restructuring charges Non-GAAP Non GAAP Revenue $27,383 $27,383 Cost of sales 20,945 20,945 Total OpEx 4,145 (380) (94) (75) 3,596 Operating profit 2,293 380 94 75 2,842 Interest & other, net I t t th t (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 71 $0.86 $0 86 35 November 22, 2010 http://www.hp.com/investor/home
  • 36. Q1 FY09 GAAP to non-GAAP BRIDGE Amort. of In millions except Purchased Acquisition related per share amounts GAAP Intangibles Restructuring charges Non-GAAP Non GAAP Revenue $28,807 $28,807 Cost of sales 22,073 22,073 Total OpEx 4,237 (418) (146) (48) 3,625 Operating profit 2,497 418 146 48 3,109 Interest & other, net other (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 36 November 22, 2010 http://www.hp.com/investor/home
  • 37. FY08 GAAP to non-GAAP BRIDGE Amort. of In millions except Purchased Acquisition related per share amounts GAAP Intangibles Restructuring charges Non-GAAP Non GAAP Revenue $118,364 $118,364 Cost of sales 89,699 89,699 Total OpEx 18,192 (1,012) (270) (41) 16,869 Operating profit 10,473 1,012 270 41 11,796 Interest & other, net other - - Pre-tax earnings 10,473 1,012 270 41 11,796 Income tax 2,144 262 74 14 2,494 Tax rate 20.5% 21.1% Net earnings 8,329 9,302 EPS $3.25 $3 25 $3.62 $3 62 37 November 22, 2010 http://www.hp.com/investor/home
  • 38. Q4 FY08 GAAP to non-GAAP BRIDGE Amort. of In millions except Purchased Acquisition related per share amounts GAAP Intangibles Restructuring charges Non-GAAP Non GAAP Revenue $33,603 $33,603 Cost of sales 25,853 25,853 Total OpEx 5,009 (369) (251) (41) 4,348 Operating profit 2,741 369 251 41 3,402 Interest & other, net other (98) (98) Pre-tax earnings 2,643 369 251 41 3,304 Income tax 531 96 69 14 710 Tax rate 20.1% 21.5% Net earnings 2,112 2,594 EPS $0.84 $1.03 38 November 22, 2010 http://www.hp.com/investor/home
  • 39. Q3 FY08 GAAP to non-GAAP BRIDGE In millions except Amort. of per share amounts GAAP Purchased Intangibles Restructuring Non-GAAP Non GAAP Revenue $28,032 $28,032 Cost of sales 21,197 21,197 Total OpEx 4,306 (213) (5) 4,088 Operating profit 2,529 213 5 2,747 Interest & other, net 23 23 Pre-tax earnings 2,552 213 5 2,770 Income tax 525 56 1 582 Tax rate 20.6% 21.0% Net earnings 2,027 2,188 EPS $0.80 $0 80 $0.86 $0 86 39 November 22, 2010 http://www.hp.com/investor/home
  • 40. Q2 FY08 GAAP to non-GAAP BRIDGE In millions except Amort. of per share amounts GAAP Purchased Intangibles Restructuring Non-GAAP Non GAAP Revenue $28,262 $28,262 Cost of sales 21,205 21,205 Total OpEx 4,467 (224) (4) 4,239 Operating profit 2,590 224 4 2,818 Interest & other, net 3 3 Pre-tax earnings 2,593 224 4 2,821 Income tax 536 55 1 592 Tax rate 20.7% 21.0% Net earnings 2,057 2,229 EPS $0.80 $0 80 $0.87 $0 87 40 November 22, 2010 http://www.hp.com/investor/home
  • 41. Q1 FY08 GAAP to non-GAAP BRIDGE Amort. of In millions except Purchased per share amounts GAAP Intangibles Restructuring Non-GAAP Revenue $28,467 $28,467 Cost of sales 21,444 21,444 Total OpEx 4,410 (206) (10) 4,194 Operating profit 2,613 206 10 2,829 Interest & other, net 72 72 Pre-tax earnings 2,685 206 10 2,901 Income tax 552 55 3 610 Tax rate 20.6% 20 6% 21.0% 21 0% Net earnings 2,133 2,291 EPS $0.80 $0.86 41 November 22, 2010 http://www.hp.com/investor/home
  • 42. FY07 GAAP to non-GAAP BRIDGE Amort. of In millions except Purchased Pension per share amounts GAAP Intangibles Restructuring Curtail. Non-GAAP Revenue $104,286 $104,286 Cost of sales 78,683 78,683 Total OpEx 16,884 16 884 (973) (387) 517 16,041 16 041 Operating profit 8,719 973 387 (517) 9,562 Interest & other, net other 458 458 Pre-tax earnings 9,177 973 387 (517) 10,020 Income tax 1,913 197 136 (180) 2,066 Tax rate 20.8% 20.6% Net earnings 7,264 7,954 EPS $2.68 $2 68 $2.93 $2 93 42 November 22, 2010 http://www.hp.com/investor/home
  • 43. Q4 FY07 GAAP to non-GAAP BRIDGE In millions except Amort. of per share amounts GAAP Purchased Intangibles Restructuring Non-GAAP Revenue $28,293 $28,293 Cost of sales 21,250 21,250 Total OpEx 4,411 (191) 20 4,240 Operating profit 2,632 191 (20) 2,803 Interest & other, net other 67 67 Pre-tax earnings 2,699 191 (20) 2,870 Income tax 535 46 (7) 574 Tax rate 19.8% 20.0% Net earnings 2,164 2,296 EPS $0.81 $0.86 43 November 22, 2010 http://www.hp.com/investor/home
  • 44. November 22, 2010 http://www.hp.com/investor/home

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