HP’s Profit Falls 91%, but It Beats Expectations



                                                                            
                  HEWLETT-PACKARD COMPANY AND SUBSIDIARIES                  
  ADJUSTMENTS TO GAAP NET REVENUE, NET EARNINGS, EARNINGS FROM OPERATIONS,  
                  OPERATING MARGIN AND EARNINGS PER SHARE                   
                                (Unaudited)                                 
                   (In millions except per share amounts)                   
                                                                            
                                                                            
                  Three               Three               Three             
                  months              months              months            
                  ended               ended               ended             
                 October   Diluted     July    Diluted   October   Diluted  
                   31,     earnings    31,     earnings    31,     earnings 
                   2011   per share    2011   per share    2010   per share 
                 -------  ---------  -------  ---------  -------  --------- 
                                                                            
GAAP net revenue $32,122             $31,189             $33,278            
                                                                            
Non GAAP                                                                    
 adjustment:                                                                
  WebOS device                                                              
   contra                                                                   
   revenue,                                                                 
   net(a)            142                   -                   -            
                 -------             -------             -------            
Non GAAP net                                                                
 revenue         $32,264                 $31,189                          $33,278                        
                                  =======                          =======                          =======                        
                                                                                                                                                        
                                                                                                                                                        
GAAP  net                                                                                                                                        
  earnings                $      239    $        0.12    $  1,926    $        0.93    $  2,538    $        1.10  
                                                                                                                                                        
Non-GAAP                                                                                                                                        
  adjustments:                                                                                                                              
    Amortization                                                                                                                            
      of  purchased                                                                                                                          
      intangible                                                                                                                              
      assets                        411              0.20            358              0.17            424              0.19  
    Restructuring                                                                                                                          
      charges                      179              0.09            150              0.07            235              0.10  
    Acquisition-                                                                                                                            
      related                                                                                                                                    
      charges  in                                                                                                                              
      earnings  from                                                                                                                        
      operations                114              0.06              18              0.01              51              0.02  
    Impairment  of                                                                                                                          
      goodwill  and                                                                                                                          
      purchased                                                                                                                                
      intangible                                                                                                                              
      assets(b)                  885              0.44                -                    -                -                    -  
    Wind  down  of                                                                                                                            
      the  WebOS                                                                                                                                
      device                                                                                                                                      
      business(c)              755              0.38                -                    -                -                    -  
    Acquisition-                                                                                                                            
      related                                                                                                                                    
      charges  in                                                                                                                              
      interest  and                                                                                                                          
      other,  net(d)          276              0.14                -                    -                -                    -  
    Adjustments                                                                                                                              
      for  taxes                (509)          (0.26)        (170)          (0.08)        (184)          (0.08)
                                  -------    ---------    -------    ---------    -------    ---------  
Non-GAAP  net                                                                                                                                
  earnings                $  2,350    $        1.17    $  2,282    $        1.10    $  3,064    $        1.33  
                                  =======    =========    =======    =========    =======    =========  
                                                                                                                                                        
                                                                                                                                                        
GAAP  earnings                                                                                                                              
  from  operations  $      795                          $  2,520                          $  3,295                        
                                                                                                                                                        
Non-GAAP                                                                                                                                        
  adjustments:                                                                                                                              
    Amortization                                                                                                                            
      of  purchased                                                                                                                          
      intangible                                                                                                                              
      assets                        411                                  358                                  424                        
    Restructuring                                                                                                                          
      charges                      179                                  150                                  235                        
    Acquisition-                                                                                                                            
      related                                                                                                                                    
      charges  in                                                                                                                              
      earnings  from                                                                                                                        
      operations                114                                    18                                    51                        
    Impairment  of                                                                                                                          
      goodwill  and                                                                                                                          
      purchased                                                                                                                                
      intangible                                                                                                                              
      assets(b)                  885                                      -                                      -                        
    Wind  down  of                                                                                                                            
      the  WebOS                                                                                                                                
      device                                                                                                                                      
      business(c)              755                                      -                                      -                        
                                  -------                          -------                          -------                        
Non-GAAP                                                                                                                                        
  earnings  from                                                                                                                            
  operations            $  3,139                          $  3,046                          $  4,005                        
                                  =======                          =======                          =======                        
                                                                                                                                                        
GAAP  operating                                                                                                                            
  margin                                2%                                    8%                                  10%                      
Non-GAAP                                                                                                                                        
  adjustments                      8%                                    2%                                    2%                      
                                  -------                          -------                          -------                        
                                                                                                                                                        
Non-GAAP                                                                                                                                        
  operating                                                                                                                                    
  margin                              10%                                  10%                                  12%                      
                                  =======                          =======                          =======                        
                                                                                                                                                        
                                                                                                                                                        
(a)  Includes  contra  revenue  primarily  associated  with  sales  incentive              
        programs  to  wind  down  the  webOS  device  business,  net  of  current  quarter  
        webOS  device  revenue.                                                                                                      
                                                                                                                                                        
(b)  Includes  impairment  charges  to  goodwill  and  purchased  intangible  assets  
        associated  with  the  acquisition  of  Palm  Inc.  on  July  1,2010  recorded  as  
        a  result  of  the  decision  announced  on  August  18,2011  to  wind  down  the      
        webOS  device  business.                                                                                                    
                                                                                                                                                        
(c)  Includes  primarily  expenses  for  supplier-related  obligations  and  contra  
        revenue  associated  with  sales  incentive  programs  related  to  winding  down
        the  webOS  device  business.                                                                                            
                                                                                                                                                        
(d)  Includes  primarily  the  cost  of  the  British  pound  options  bought  to  limit
        foreign  exchange  rate  risk  in  connection  with  the  Autonomy  acquisition.  
                                                                                                                                                        
                                                                                                                                                        
 

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