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HP Q1 FY12EarningsAnnouncementFebruary 22, 2012http://www.hp.com/investor/home1    © Copyright 2012 Hewlett-Packard Develo...
Forward-looking statementsThis presentation may contain forward-looking statements that involve risks, uncertainties and a...
Use of non-GAAP financial informationHP has included non-GAAP financial measures in this presentation to supplement HP’s c...
Q1 FY12 results overview                                                                • Net revenue of $30.0B, down 7% Y...
Q1 FY12 revenueBy segment(1)                                                                                              ...
Revenue & EPS performance                                         $36                                                     ...
Regional revenue trends                                                 Americas                                          ...
Revenue growth              Y/Y revenue growth (%)   15%                                       10%                        ...
Personal systems group (PSG)In billions                                    Revenue                                        ...
ServicesIn billions                                   Revenue                                                  In millions...
Imaging & printing group (IPG)In billions                                   Revenue                                       ...
Enterprise servers, storage and networking (ESSN)In billions                                   Revenue                    ...
SoftwareIn millions                                   Revenue                                                  In millions...
HP financial services (HPFS)In millions                                   Revenue                                         ...
Non-GAAP(1) financial information                In millions except                per share amounts                      ...
Q1 FY12 GAAP to non-GAAP bridge         In millions except                                                           Amort...
Gross cash & net cash                                  In billions                                    $15.0               ...
Cash flowIn billions     $16.0                     $14.6     $14.0                                              $13.4     ...
Stock repurchase                                       Quarterly trends                                                   ...
FY12 reclassification                                                      FY10                                           ...
FY12 inter-segment reclassification                                                      FY10                             ...
FY12 intra-segment reclassification                                                      FY10                             ...
Outlook Q2 FY12 guidanceGAAP EPS                                             $0.68 – $0.71Non-GAAP EPS(1)                 ...
Supplemental slides24     © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is s...
Inventory & accounts receivable                                            Inventory                                      ...
PP&E & accounts payable                                         Net PP&E                                                  ...
Working capital metrics                    Days                      60                      50                      40   ...
HPFS supplemental data                       In millions                                                Q1 FY12           ...
FY11 GAAP to non-GAAP bridge                                                                webOS                Impair. o...
Q4 FY11 GAAP to non-GAAP bridge                                                                webOS                Impair...
Q3 FY11 GAAP to non-GAAP bridge                                                                                       Amor...
Q2 FY11 GAAP to non-GAAP bridge                                                                                       Amor...
Q1 FY11 GAAP to non-GAAP bridge                                                                                       Amor...
FY10 GAAP to non-GAAP bridge                                                                                       Amort. ...
Q4 FY10 GAAP to non-GAAP bridge                                                                                       Amor...
Q3 FY10 GAAP to non-GAAP bridge                                                                                       Amor...
Q2 FY10 GAAP to non-GAAP bridge                                                                                       Amor...
HP Q1 FY12 Earnings Announcement
HP Q1 FY12 Earnings Announcement
HP Q1 FY12 Earnings Announcement
HP Q1 FY12 Earnings Announcement
HP Q1 FY12 Earnings Announcement
HP Q1 FY12 Earnings Announcement
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HP Q1 FY12 Earnings Announcement

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Transcript of "HP Q1 FY12 Earnings Announcement"

  1. 1. HP Q1 FY12EarningsAnnouncementFebruary 22, 2012http://www.hp.com/investor/home1 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  2. 2. Forward-looking statementsThis presentation may contain forward-looking statements that involve risks, uncertainties and assumptions. All statements other than statements ofhistorical 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 otherfinancial items; any statements of the plans, strategies and objectives of management for future operations, including the execution of cost reductionprograms and restructuring and integration plans; any statements concerning the expected development, performance or market share relating to productsor services; any statements regarding current or future macroeconomic trends or events and the impact of those trends and events on HP and its financialperformance; any statements regarding pending investigations, claims or disputes; any statements of expectation or belief; and any statements ofassumptions 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 existingproducts and services to meet customer needs and respond to emerging technological trends; the execution and performance of contracts by HP and itssuppliers, customers and partners; the protection of HP’s intellectual property assets, including intellectual property licensed from third parties; integrationand other risks associated with business combination and investment transactions; the hiring and retention of key employees; assumptions related topension and other post-retirement costs; expectations and assumptions relating to the execution and timing of cost reduction programs and restructuringand integration plans; the resolution of pending investigations, claims and disputes; and other risks that are described in HP’s Annual Report on Form 10-Kfor the fiscal year ended October 31, 2011 and HP’s other filings with the Securities and Exchange Commission. As in prior periods, the financial informationset forth in this release, including tax-related items, reflects estimates based on information available at this time. While HP believes these estimates to bemeaningful, these amounts could differ materially from actual reported amounts in HP’s Form 10-Q for the fiscal quarter ended January 31, 2012. Inparticular, determining HP’s actual tax balances and provisions as of January 31, 2012 requires extensive internal and external review of tax data (includingconsolidating and reviewing the tax provisions of numerous domestic and foreign entities), which is being completed in the ordinary course of preparing HP’sForm 10-Q. HP assumes no obligation and does not intend to update these forward-looking statements.2 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  3. 3. Use of non-GAAP financial informationHP 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 measuresare 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-GAAPdiluted 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’smanagement to be outside of HP’s core business segment operating results. Gross cash, net cash and free cash flow are liquidity measures that provide usefulinformation to management about the amount of cash available for investment in HP’s businesses, funding strategic acquisitions, repurchasing stock and otherpurposes.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 ofHP’s results as reported under GAAP. Items such as impairment of goodwill and purchased intangible assets and amortization of purchased intangible assets, thoughnot 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 economiceffect 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-GAAPoperating 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 pershare. 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 liquiditymeasure. 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 weprovide 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-GAAPfinancial measures only supplementally. We also provide robust and detailed reconciliations of each non-GAAP financial measure to the most directly comparableGAAP 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 informationused 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 furtherbelieve that providing this information better enables investors to understand HP’s operating performance and to evaluate the efficacy of the methodology andinformation used by management to evaluate and measure such performance.3 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  4. 4. Q1 FY12 results overview • Net revenue of $30.0B, down 7% Y/Y, down 8% Y/Y in constant currencyFinancial Summary • 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 Non-GAAP Non-GAAP Non-GAAP Non-GAAP $ in millions Q1 Net Revenue Growth Y/Y% OP $ OP % of rev OP $ Y/Y 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 (1) (2) Total HP $30,036 (7%) $2,570 8.6% ($1,436) (3.8) pts1. 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. 4 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  5. 5. Q1 FY12 revenueBy segment(1) By region Imaging & U.S. Printing Group Services 34% 21% 28% EMEA Americas 39%, 44%, down 9% Y/Y down 4% Y/Y Personal Canada/ Enterprise Systems Group Latin America Servers, 29% 10% Storage & Networking Asia Pacific 16% 17%, down 10% Y/Y HP Financial Services & Software Corp. Investments 3% 3%1. Revenue mix calculated based on total segments, which excludes eliminations and other items not included in segment results. 5 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  6. 6. Revenue & EPS performance $36 $1.50 $34 $1.40 $1.30 $32 $1.20 $30 $1.10 $28 $1.00 $26 $0.90 $0.80 $24 $0.70 $22 $0.60 $20 $0.50 $18 $0.40 $0.30 $16 $0.20 $14 $0.10 $12 $0.00 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 Revenue (in billions)(1)(2) $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 (2) $0.93 $0.86 $0.92 $1.14 $1.07 $1.09 $1.08 $1.33 $1.36 $1.24 $1.10 $1.17 $0.921. 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.” 6 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  7. 7. Regional revenue trends Americas United States (including U.S.) $16 20% $12 20% Y/Y revenue growth % Y/Y revenue growth % 15% 15% $14 $10 10% 10% $ in billions$ in billions $12 5% $8 5% $10 0% $6 0% (5%) (5%) $8 $4 (10%) (10%) $6 (15%) $2 (15%) 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 EMEA Asia Pacific $14 20% $7 20% 15% $6 15% Y/Y revenue growth % $12 Y/Y revenue growth % 10% $5 10% $ in billions $ in billions $10 5% $4 5% $8 0% $3 0% (5%) $2 (5%) $6 (10%) $1 (10%) $4 (15%) $0 (15%) 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 7 Y/Y revenue growth % Y/Y constant currency revenue growth % © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  8. 8. Revenue growth Y/Y revenue growth (%) 15% 10% 5% 0% (5%) (10%) 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 Constant currency (1)(2) 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) 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%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.” 8 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  9. 9. Personal systems group (PSG)In billions Revenue In millions Operating profit$12.0 $700 7% OP % revenue$10.0 $600 6% $8.0 $500 5% $400 4% $6.0 $300 3% $4.0 $200 2% $2.0 $100 1% $0.0 $0 0% 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 Q1 FY12 revenue by business • PSG revenue of $8.9B, down 15% Y/Y 2% • Operating profit of $464M, 5.2% of revenue Notebooks 6% Desktops • Total units down 18% Y/Y 56% Workstations • Notebook revenue down 15%, units down 18% Other Y/Y • Desktop revenue down 18%, units down 19% Y/Y 36% • Consumer client revenue down 25% Y/Y, 9 Commercial client revenue down 7% Y/Y © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  10. 10. ServicesIn billions Revenue In millions Operating profit $10.0 $1,600 18% $1,400 16% $8.0 OP % revenue $1,200 14% $6.0 $1,000 12% $800 10% $4.0 $600 8% $400 6% $2.0 $200 4% $0.0 $0 2% 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 Q1 FY12 revenue by business • Services revenue of $8.6B, up 1% Y/Y ITO • Operating profit of $0.9B, 10.5% of revenue 27% Technology Services 43% Application and • ITO revenue up 2% Y/Y Business Services • Technology Services revenue up 2% Y/Y • Application and Business Services revenue flat 30% Y/Y10 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  11. 11. Imaging & printing group (IPG)In billions Revenue In millions Operating profit$8.0 $1,300 20% OP % of revenue$6.0 $1,100 16%$4.0 $900 12%$2.0 $700 8%$0.0 $500 4% 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 Q1 FY12 revenue by business 11% • IPG revenue of $6.3B, down 7% Y/Y Supplies Commercial • Operating profit of $761M, 12.2% of revenue Consumer • Supplies revenue down 6% Y/Y 24% • Total printer hardware units down 13% Y/Y 65% • Consumer printer hardware units down 15% Y/Y • Commercial printer hardware units down 10% Y/Y11 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  12. 12. Enterprise servers, storage and networking (ESSN)In billions Revenue In millions Operating profit $6.0 $1,000 16% OP % revenue $900 14% $5.0 $800 12% $4.0 $700 $600 10% $3.0 $500 8% $400 6% $2.0 $300 4% $1.0 $200 $100 2% $0.0 $0 0% 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 Q1 FY12 revenue by business • ESSN revenue of $5.0B, down 10% Y/Y 12% Industry Standard • Operating profit of $562M, 11.2% of revenue Servers (ISS) Business Critical • ISS revenue down 11% Y/Y 19% Systems (BCS) • BCS revenue down 27% Y/Y Storage Works Division 8% 61% (SWD) • Storage revenue down 6% Y/Y Networking • Networking revenue flat Y/Y12 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  13. 13. SoftwareIn millions Revenue In millions Operating profit$1,200 $300 35%$1,000 $250 30% OP %revenue $800 $200 25% $600 $150 20% $400 $100 15% $200 $50 10% $0 $0 5% 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 Q1 FY12 revenue by type • Software revenue of $946M, up 30% Y/Y 23% Licenses 31% Support • Operating profit of $162M, 17.1% of revenue Services • Licenses revenue up 12% Y/Y • Support revenue up 22% Y/Y 46% • Services revenue up 108% Y/Y13 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  14. 14. HP financial services (HPFS)In millions Revenue In millions Operating profit $1,000 $105 12% $90 10% OP %revenue $800 $75 8% $600 $60 6% $400 $45 4% $30 $200 $15 2% $0 $0 0% 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 Q1 FY12 revenue by region 12% Americas • HPFS revenue of $950M, up 15% Y/Y EMEA Asia Pacific • Operating profit of $91M, 9.6% of revenue 29% • Financing volume flat Y/Y 59% • Net portfolio assets of $12.4B, up 8% Y/Y14 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  15. 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 $1.361. 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.” 15 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  16. 16. Q1 FY12 GAAP to non-GAAP bridge In millions except Amortization of Restructuring Acquisition related per share amounts GAAP purchased intangibles charges charges Non-GAAPRevenue $30,036 $30,036Cost of sales 23,313 23,313Total OpEx 4,681 (466) (40) (22) 4,153Operating profit 2,042 466 40 22 2,570Interest & other, net (221) (221)Pre-tax earnings 1,821 466 40 22 2,349Income tax 353 136 22 6 517Tax rate 19.4% 22.0%Net earnings $1,468 $1,832EPS $0.73 $0.9216 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  17. 17. Gross cash & net cash In billions $15.0 $10.0 $5.0 $0.0 -$5.0 -$10.0 -$15.0 -$20.0 -$25.0 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 Gross cash(1) $13.7 $14.3 $14.8 $11.0 $10.0 $12.8 $13.0 $8.1 $8.2 Net cash (2) ($1.8) ($3.0) ($4.7) ($10.6) ($9.9) ($9.7) ($12.2) ($22.0) ($22.2) Net cash excl. HPFS Debt (3) $6.6 $5.6 $4.0 ($1.5) ($0.4) $0.2 ($2.1) ($11.7) ($11.8)1. Includes cash and cash equivalents, short-term investments, and certain liquid long-term investments2. Net cash is defined as gross cash less total company debt including the effect of hedging3. Net cash excl HPFS debt = HP net cash plus HPFS net debt 17 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  18. 18. Cash flowIn billions $16.0 $14.6 $14.0 $13.4 $12.6 $12.0 $11.9 $12.0 $10.2 $10.0 $9.1 $8.4 $8.0 $6.0 $4.0 $3.1 $2.7 $2.0 $1.2 $0.4 $0.0 FY08 FY09 FY10 FY11 Q1 FY11 Q1 FY12 (1) Cash flow from operations Free cash flow1. Free cash flow = cash flow from operations less net capital expenditures 18 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  19. 19. Stock repurchase Quarterly trends FY08 – FY12 In billions In billions In millions $5.0 $10.0B remaining in stock $12 300 repurchase authorization at $4.5 the end of Q1 FY12 $10 250 $4.0 $3.5 $8 200 $3.0 $2.5 $6 150 $2.0 $4 100 $1.5 $1.0 $2 50 $0.5 $0 0 FY12 $0.0 FY08 FY09 FY10 FY11 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 YTD Stock repurchase $2.7 $1.8 $2.6 $4.0 $2.3 $2.7 $4.6 $0.5 $0.8 Stock repurchase $9.6 $5.1 $11.0 $10.1 $0.8 Shares received 216 132 240 262 2919 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  20. 20. FY12 reclassification FY10 FY11 Revised Previously Revised Previously In millions Amount Reported Variance In millions Amount 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 Amortization of purchased 1,484 1,484 - 1,607 1,607 - intangibles intangibles Restructuring charges 1,144 1,144 - Restructuring charges 645 645 - Acquisition related charges 293 293 - Acquisition related charges 182 182 - Impairment of goodwill and Impairment of goodwill and purchased intangible purchased intangible 885 885 - assets assets 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 $-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 expensesto better align those costs with the functional areas that benefit from those expenditures. 20 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  21. 21. FY12 inter-segment reclassification FY10 FY11 Revised Previously Revised Previously In millions Segment Amount Reported Variance Segment Amount 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 Corporate 214 346 (132) 208 322 (114) Investments Investments 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 Corporate (358) (366) 8 (1,619) (1,616) (3) Investments Investments Total $13,314 $13,314 $- Total $11,230 $11,230 $-HP has reflected fiscal 2012 organizational realignments on a backward-looking basis to provide improved visibility and comparability. 21 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  22. 22. FY12 intra-segment reclassification FY10 FY11 Revised Previously Revised Previously In millions Business Unit Amount Reported Variance Business Unit Amount Reported Variance Infrastructure Infrastructure Net Revenue Technology $14,974 $14,942 $32 Technology $15,224 $15,189 $35 Outsourcing Outsourcing Technology Services 10,270 10,627 (357) Technology Services 10,542 10,879 (337) Application & Application & 10,032 - 10,032 9,936 - 9,936 Business Services Business Services Application Application - 6,792 (6,792) - 6,852 (6,852) Services Services Business Process Business Process - 2,872 (2,872) - 2,672 (2,672) Outsourcing Outsourcing Other Services - 296 (296) Other Services - 362 (362) IPG Commercial IPG Commercial 5,981 5,569 412 6,183 5,790 393 Hardware Hardware 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 $-HP has reflected fiscal 2012 organizational realignments on a backward-looking basis to provide improved visibility and comparability. 22 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  23. 23. Outlook Q2 FY12 guidanceGAAP EPS $0.68 – $0.71Non-GAAP EPS(1) $0.88 – $0.91 Full year FY12 guidance GAAP EPS At least $3.20 Non-GAAP EPS(2) At least $4.001. 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. 23 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  24. 24. Supplemental slides24 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  25. 25. Inventory & accounts receivable Inventory Accounts receivable In billions In billions $9.0 11.0% $20.0 $18.5 $18.6 20.0% $18.1 $18.2 $18.0 18.0% $16.6 $8.0 10.0% $15.6 $15.9 $7.4 $7.5 $7.3 $16.0 $14.5 $14.8 16.0% $7.2 $6.7 $6.8 $7.0 $6.6 $6.5 9.0% $14.0 14.0% $6.4 $12.0 12.0% $6.0 8.0% $10.0 10.0% $5.0 7.0% $8.0 8.0% $4.0 6.0% $6.0 6.0% $4.0 4.0% $3.0 5.0% $2.0 2.0% $2.0 4.0% $0.0 0.0% 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 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 Receivables $14.5 $14.8 $15.6 $18.5 $16.6 $18.6 $18.1 $18.2 $15.9 % of Rev 5.7% 5.4% 5.8% 5.1% 5.3% 5.3% 5.8% 5.9% 5.8% % of Rev 12.4% 12.3% 12.6% 14.7% 13.0% 14.6% 14.1% 14.3% 12.7%25 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  26. 26. PP&E & accounts payable Net PP&E Accounts payable In billions In billions $14.9 $14.8 $13.0 12% $15.0 $14.5 $12.3 $12.1 $14.4 $14.2 $11.8 $11.6 $11.9 $12.0 $13.6 $13.4 $11.5 $13.5 $11.2 $11.2 $13.0 $12.4 $11.0 10% $11.0 $9.0 8% $9.0 $7.0 6% $7.0 $5.0 4% 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 $5.0 PP&E $11.2 $11.2 $11.5 $11.8 $11.6 $11.9 $12.0 $12.3 $12.1 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 % of Rev 9.5% 9.3% 9.3% 9.3% 9.1% 9.3% 9.3% 9.7% 9.7% Payables $13.6 $13.4 $14.9 $14.4 $13.5 $14.2 $14.5 $14.8 $12.426 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  27. 27. Working capital metrics Days 60 50 40 30 20 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 4827 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  28. 28. HPFS supplemental data In millions Q1 FY12 Q1 FY11 Q4 FY11 (1) Depreciation $457 $404 $448 (1) Net capital expenditures $430 $465 $585 Sequential increase in net financing $7 $143 $63 receivables1. Depreciation and net capital expenditures are shown net of inter-company eliminations. 28 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  29. 29. FY11 GAAP to non-GAAP bridge webOS Impair. of goodwill Amort. of In millions except hardware and purchased purchased Restructuring Acquisition per share amounts GAAP wind down intangible assets intangibles charges related charges Non-GAAPRevenue $127,245 142 $127,387Cost of sales 97,418 (548) 96,870Total OpEx 20,150 (65) (885) (1,607) (645) (182) 16,766Operating profit 9,677 755 885 1,607 645 182 13,751Interest & other, net (695) 276 (419)Pre-tax earnings 8,982 755 885 1,607 645 458 13,332Income tax 1,908 198 25 489 198 135 2,953Tax rate 21.2% 22.1%Net earnings $7,074 $10,379EPS $3.32 $4.8829 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  30. 30. Q4 FY11 GAAP to non-GAAP bridge webOS Impair. of goodwill Amort. of In millions except hardware and purchased purchased Restructuring Acquisition per share amounts GAAP wind down intangible assets intangibles charges related charges Non-GAAPRevenue $32,122 142 $32,264Cost of sales 25,304 (548) 24,756Total OpEx 6,023 (65) (885) (411) (179) (114) 4,369Operating profit 795 755 885 411 179 114 3,139Interest & other, net (401) 276 (125)Pre-tax earnings 394 755 885 411 179 390 3,014Income tax 155 198 25 127 47 112 664Tax rate 39.3% 22.0%Net earnings $239 $2,350EPS $0.12 $1.1730 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  31. 31. Q3 FY11 GAAP to non-GAAP bridge Amort. of In millions except Purchased Acquisition per share amounts GAAP Intangibles Restructuring related charges Non-GAAPRevenue $31,189 $31,189Cost of sales 23,901 23,901Total OpEx 4,768 (358) (150) (18) 4,242Operating profit 2,520 358 150 18 3,046Interest & other, net (121) (121)Pre-tax earnings 2,399 358 150 18 2,925Income tax 473 108 56 6 643Tax rate 19.7% 22.0%Net earnings $1,926 $2,282EPS $0.93 $1.1031 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  32. 32. Q2 FY11 GAAP to non-GAAP bridge Amort. of In millions except Purchased Acquisition per share amounts GAAP Intangibles Restructuring related charges Non-GAAPRevenue $31,632 $31,632Cost of sales 23,832 23,832Total OpEx 4,832 (413) (158) (21) 4,240Operating profit 2,968 413 158 21 3,560Interest & other, net (76) (76)Pre-tax earnings 2,892 413 158 21 3,484Income tax 588 126 46 7 767Tax rate 20.3% 22.0%Net earnings $2,304 $2,717EPS $1.05 $1.2432 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  33. 33. Q1 FY11 GAAP to non-GAAP bridge Amort. of In millions except Purchased Acquisition per share amounts GAAP Intangibles Restructuring related charges Non-GAAPRevenue $32,302 $32,302Cost of sales 24,381 24,381Total OpEx 4,527 (425) (158) (29) 3,915Operating profit 3,394 425 158 29 4,006Interest & other, net (97) (97)Pre-tax earnings 3,297 425 158 29 3,909Income tax 692 129 48 10 879Tax rate 21.0% 22.5%Net earnings 2,605 3,030EPS $1.17 $1.3633 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  34. 34. FY10 GAAP to non-GAAP bridge Amort. of In millions except Purchased Acquisition per share amounts GAAP Intangibles Restructuring related charges Non-GAAPRevenue $126,033 $126,033Cost of sales 95,852 95,852Total OpEx 18,702 (1,484) (1,144) (293) 15,781Operating profit 11,479 1,484 1,144 293 14,400Interest & other, net (505) (505)Pre-tax earnings 10,974 1,484 1,144 293 13,895Income tax 2,213 391 342 83 3,029Tax rate 20.2% 21.8%Net earnings 8,761 10,866EPS $3.69 $4.5834 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  35. 35. Q4 FY10 GAAP to non-GAAP bridge Amort. of In millions except Purchased Acquisition per share amounts GAAP Intangibles Restructuring related charges Non-GAAPRevenue $33,278 $33,278Cost of sales 24,968 24,968Total OpEx 5,015 (424) (235) (51) 4,305Operating profit 3,295 424 235 51 4,005Interest & other, net (81) (81)Pre-tax earnings 3,214 424 235 51 3,924Income tax 676 98 68 18 860Tax rate 21.0% 21.9%Net earnings 2,538 3,064EPS $1.10 $1.3335 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  36. 36. Q3 FY10 GAAP to non-GAAP bridge Amort. of In millions except Purchased Acquisition per share amounts GAAP Intangibles Restructuring related charges Non-GAAPRevenue $30,729 $30,729Cost of sales 23,340 23,340Total OpEx 5,066 (383) (598) (127) 3,958Operating profit 2,323 383 598 127 3,431Interest & other, net (134) (134)Pre-tax earnings 2,189 383 598 127 3,297Income tax 416 100 175 31 722Tax rate 19.0% 21.9%Net earnings 1,773 2,575EPS $0.75 $1.0836 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  37. 37. Q2 FY10 GAAP to non-GAAP bridge Amort. of In millions except Purchased Acquisition per share amounts GAAP Intangibles Restructuring related charges Non-GAAPRevenue $30,849 $30,849Cost of sales 23,542 23,542Total OpEx 4,449 (347) (180) (77) 3,845Operating profit 2,858 347 180 77 3,462Interest & other, net (91) (91)Pre-tax earnings 2,767 347 180 77 3,371Income tax 567 92 57 22 738Tax rate 20.5% 21.9%Net earnings 2,200 2,633EPS $0.91 $1.0937 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
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