More information on HP’s quarterly earnings, including additional financial analysis and an earnings overview presentation, is available on HP’s Investor Relations website at www.hp.com/investor/home.

HP’s Q1 FY11 earnings conference call is accessible via an audio webcast at www.hp.com/investor/2011q1webcast.

About HP

HP creates new possibilities for technology to have a meaningful impact on people, businesses, governments and society. The world’s largest technology company, HP brings together a portfolio that spans printing, personal computing, software, services and IT infrastructure to solve customer problems. More information about HP is available at http://www.hp.com.

Use of non-GAAP financial information

To supplement HP’s consolidated condensed financial statements presented on a GAAP basis, HP provides non-GAAP operating profit, non-GAAP operating margin, non-GAAP net earnings, non-GAAP diluted earnings per share and gross cash. HP also provides forecasts of non-GAAP diluted earnings per share. A reconciliation of the adjustments to GAAP results for this quarter and prior periods is included in the tables below. In addition, an explanation of the ways in which HP management uses these non-GAAP measures to evaluate its business, the substance behind HP management’s decision to use these non-GAAP measures, the material limitations associated with the use of these non-GAAP measures, the manner in which HP management compensates for those limitations, and the substantive reasons why HP management believes that these non-GAAP measures provide useful information to investors is included under “Use of Non-GAAP Financial Measures” after the tables below. This additional non-GAAP financial information is not meant to be considered in isolation or as a substitute for operating profit, operating margin, net earnings, diluted earnings per share, or cash and cash equivalents prepared in accordance with GAAP.

Forward-looking statements

This news release contains forward-looking statements that involve risks, uncertainties and assumptions. If the risks or uncertainties ever materialize or the assumptions prove incorrect, the 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, 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 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 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, 2010 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 quarter ended January 31, 2011. In particular, determining HP’s actual tax balances and provisions as of January 31, 2011 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.

© 2011 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice. HP shall not be liable for technical or editorial errors or omissions contained herein.

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(Unaudited)
(In millions except per share amounts)
		Three months ended
		January 31, 2011				October 31, 2010				January 31, 2010
Net revenue		$	32,302			$	33,278			$	31,177
Costs and Expenses: (a)
Cost of sales			24,408				24,995				24,027
Research and development			798				814				681
Selling, general and administrative			3,090				3,464				2,967
Amortization of purchased intangible assets			425				424				330
Restructuring charges			158				235				131
Acquisition-related charges			29				51				38
Total costs and expenses			28,908				29,983				28,174
Earnings from operations			3,394				3,295				3,003
Interest and other, net			(97	)			(81	)			(199	)
Earnings before taxes			3,297				3,214				2,804
Provision for taxes			692				676				554
Net earnings		$	2,605			$	2,538			$	2,250
Net earnings per share:
Basic		$	1.19			$	1.13			$	0.95
Diluted		$	1.17			$	1.10			$	0.93
Cash dividends declared per share		$	0.16			$	-			$	0.16
Weighted-average shares used to compute net earnings per share:
Basic			2,182				2,249				2,358
Diluted			2,226				2,297				2,427
(a) In connection with organizational realignments implemented in the first quarter of fiscal 2011, certain costs previously reported as Costs 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.

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
ADJUSTMENTS TO GAAP NET EARNINGS, EARNINGS FROM OPERATIONS,
OPERATING MARGIN AND EARNINGS PER SHARE
(Unaudited)
(In millions except per share amounts)
		Three months ended January 31, 2011				Diluted earnings per share				Three months ended October 31, 2010				Diluted earnings per share				Three months ended January 31, 2010				Diluted earnings per share
GAAP net earnings		$	2,605			$	1.17			$	2,538			$	1.10			$	2,250			$	0.93
Non-GAAP adjustments:
Amortization of purchased intangible assets			425				0.19				424				0.19				330				0.14
Restructuring charges			158				0.07				235				0.10				131				0.05
Acquisition-related charges			29				0.01				51				0.02				38				0.01
Adjustments for taxes			(187	)			(0.08	)			(184	)			(0.08	)			(155	)			(0.06	)
Non-GAAP net earnings		$	3,030			$	1.36			$	3,064			$	1.33			$	2,594			$	1.07
GAAP earnings from operations		$	3,394							$	3,295							$	3,003
Non-GAAP adjustments:
Amortization of purchased intangible assets			425								424								330
Restructuring charges			158								235								131
Acquisition-related charges			29								51								38
Non-GAAP earnings
from operations		$	4,006							$	4,005							$	3,502
GAAP operating margin			11	%							10	%							10	%
Non-GAAP adjustments			1	%							2	%							1	%
Non-GAAP operating margin			12	%							12	%							11	%

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(In millions)
		January 31, 2011			October 31, 2010
		(unaudited)
ASSETS
Current assets:
Cash and cash equivalents		$	9,934		$	10,929
Accounts receivable			16,552			18,481
Financing receivables			2,982			2,986
Inventory			6,747			6,466
Other current assets			15,189			15,322
Total current assets			51,404			54,184
Property, plant and equipment			11,575			11,763
Long-term financing receivables and other assets			11,017			12,225
Goodwill and purchased intangible assets			45,937			46,331
Total assets		$	119,933		$	124,503
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and short-term borrowings		$	3,381		$	7,046
Accounts payable			13,453			14,365
Employee compensation and benefits			2,976			4,256
Taxes on earnings			789			802
Deferred revenue			6,927			6,727
Other accrued liabilities			16,084			16,207
Total current liabilities			43,610			49,403
Long-term debt			17,022			15,258
Other liabilities			17,754			19,061
Stockholders' equity:
HP stockholders' equity			41,206			40,449
Non-controlling interests			341			332
Total stockholders' equity			41,547			40,781
Total liabilities and stockholders' equity		$	119,933		$	124,503

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(In millions)
		Three months ended
		January 31, 2011				January 31, 2010
Cash flows from operating activities:
Net earnings		$	2,605			$	2,250
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization			1,255				1,162
Stock-based compensation expense			180				181
Provision for bad debt and inventory			86				92
Restructuring charges			158				131
Deferred taxes on earnings			632				(192	)
Excess tax benefit from stock-based compensation			(64	)			(128	)
Other, net			(104	)			87
Changes in assets and liabilities:
Accounts and financing receivables			1,752				1,875
Inventory			(333	)			(543	)
Accounts payable			(912	)			(1,268	)
Taxes on earnings			(242	)			479
Restructuring			(272	)			(400	)
Other assets and liabilities			(1,671	)			(1,319	)
Net cash provided by operating activities			3,070				2,407
Cash flows from investing activities:
Investment in property, plant and equipment			(926	)			(821	)
Proceeds from sale of property, plant and equipment			543				112
Purchases of available-for-sale securities and other investments			(19	)			(9	)
Maturities and sales of available-for-sale securities and other investments			53				-
(Payments) receipts made in connection with business acquisition, net			(14	)			7
Net cash used in investing activities			(363	)			(711	)
Cash flows from financing activities:
(Repayment) issuance of commercial paper and notes payable, net			(3,710	)			78
Issuance of debt			2,117				29
Payment of debt			(138	)			(80	)
Issuance of common stock under employee stock plans			430				1,319
Repurchase of common stock			(2,290	)			(2,713	)
Excess tax benefit from stock-based compensation			64				128
Dividends			(175	)			(189	)
Net cash used in financing activities			(3,702	)			(1,428	)
(Decrease) increase in cash and cash equivalents			(995	)			268
Cash and cash equivalents at beginning of period			10,929				13,279
Cash and cash equivalents at end of period		$	9,934			$	13,547

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
SEGMENT INFORMATION
(Unaudited)
(In millions)
				Three months ended
				January 31, 2011				October 31, 2010				January 31, 2010
Net revenue: (a)
		Services		$	8,607			$	9,125			$	8,790
		Enterprise Servers, Storage and Networking			5,634				5,888				4,610
		HP Software			697				763				663
		HP Enterprise Business			14,938				15,776				14,063
		Personal Systems Group			10,449				10,283				10,584
		Imaging and Printing Group			6,630				6,995				6,206
		HP Financial Services			827				809				719
		Corporate Investments			78				135				60
		Total Segments			32,922				33,998				31,632
		Eliminations of intersegment net revenue and other			(620	)			(720	)			(455	)
		Total HP Consolidated Revenue		$	32,302			$	33,278			$	31,177
Earnings from operations: (a)
		Services		$	1,375			$	1,500			$	1,379
		Enterprise Servers, Storage and Networking			828				888				607
		HP Software			123				261				172
		HP Enterprise Business			2,326				2,649				2,158
		Personal Systems Group			672				568				530
		Imaging and Printing Group			1,129				1,220				1,054
		HP Financial Services			79				73				67
		Corporate Investments			(183	)			(157	)			(56	)
		Total Segments			4,023				4,353				3,753
		Corporate and unallocated costs and eliminations			149				(239	)			(88	)
		Unallocated costs related to stock-based compensation expense		(166		)			(109	)			(163	)
		Amortization of purchased intangible assets			(425	)			(424	)			(330	)
		Restructuring charges			(158	)			(235	)			(131	)
		Acquisition-related charges			(29	)			(51	)			(38	)
		Interest and other, net			(97	)			(81	)			(199	)
Total HP Consolidated Earnings Before Taxes				$	3,297			$	3,214			$	2,804
(a)		Certain fiscal 2011 organizational reclassifications have been reflected retroactively to provide improved visibility and comparability. For each of the quarters in fiscal year 2010, the reclassifications resulted in the transfer of revenue and operating profit among the Enterprise Servers, Storage and Networking, Services, HP Software and Corporate Investments financial reporting segments. Reclassifications between segments included the transfer of the networking business from Corporate Investments to Enterprise Servers, Storage and Networking, the transfer of the communications and media solutions business from HP Software to Services, and the transfer of the business intelligence business from HP Software to Corporate Investments. There was no impact on the previously reported financial results for the Personal Systems Group, HP Financial Services and Imaging and Printing Group segments.

		HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
		SEGMENT / BUSINESS UNIT INFORMATION
		(Unaudited)
		(In millions)
				Three months ended
				January 31, 2011				October 31, 2010				January 31, 2010
		Net revenue: (a)
		Infrastructure Technology Outsourcing		$	3,636			$	3,851			$	3,675
		Technology Services			2,602				2,733				2,631
		Application Services			1,632				1,763				1,681
		Business Process Outsourcing			658				695				734
		Other			79				83				69
		Services			8,607				9,125				8,790
		Industry Standard Servers			3,448				3,530				2,946
		Storage			1,012				1,044				889
		Business Critical Systems			555				695				556
		HP Networking (b)			619				619				219
		Enterprise Servers, Storage and Networking			5,634				5,888				4,610
		HP Software (c)			697				763				663
		HP Enterprise Business			14,938				15,776				14,063
		Notebooks			5,808				5,623				6,138
		Desktops			3,896				3,928				3,853
		Workstations			535				529				375
		Other			210				203				218
		Personal Systems Group (d)			10,449				10,283				10,584
		Supplies			4,358				4,707				4,081
		Commercial Hardware			1,464				1,541				1,291
		Consumer Hardware			808				747				834
		Imaging and Printing Group			6,630				6,995				6,206
		HP Financial Services			827				809				719
		Corporate Investments			78				135				60
		Total Segments			32,922				33,998				31,632
		Eliminations of intersegment net revenue and other			(620	)			(720	)			(455	)
		Total HP Consolidated Revenue		$	32,302			$	33,278			$	31,177
(a)		Certain fiscal 2011 organizational reclassifications have been reflected retroactively to provide improved visibility and comparability. For each of the quarters in fiscal year 2010, the reclassifications resulted in the transfer of revenue among the Enterprise Servers, Storage and Networking, Services, HP Software and Corporate Investments financial reporting segments. Reclassifications between segments included the transfer of the networking business from Corporate Investments to Enterprise Servers, Storage and Networking, the transfer of the communications and media solutions business from HP Software to Services, and the transfer of the business intelligence business from HP Software to Corporate Investments. In addition, revenue was transferred among the business units within the Services and Personal Systems Group segments. There was no impact on the previously reported financial results for the HP Financial Services and Imaging and Printing Group segments or for the business units within the Imaging and Printing Group segment.
(b)		The networking business was added to the Enterprise Servers, Storage and Networking segment in fiscal 2011.
(c)		The Business Technology Optimization and Other Software business units were consolidated into a single business unit within the HP Software segment in fiscal 2011.
(d)		The Handhelds business unit, which includes devices that run on Windows Mobile software, was reclassified into the Other business unit within the Personal Systems Group in fiscal 2011.

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
SEGMENT REVENUE SUMMARY DATA
(Unaudited)
(In millions)
				Three months ended				Revenue growth rate (%)
				January 31, 2011				Y/Y			Q/Q
Net revenue: (a)
		Infrastructure Technology Outsourcing		$	3,636			(1	%)		(6	%)
		Technology Services			2,602			(1	%)		(5	%)
		Application Services			1,632			(3	%)		(7	%)
		Business Process Outsourcing			658			(10	%)		(5	%)
		Other			79			14	%		(5	%)
		Services			8,607			(2	%)		(6	%)
		Industry Standard Servers			3,448			17	%		(2	%)
		Storage			1,012			14	%		(3	%)
		Business Critical Systems			555			0	%		(20	%)
		HP Networking			619			183	%		0	%
		Enterprise Servers, Storage and Networking			5,634			22	%		(4	%)
		HP Software			697			5	%		(9	%)
		HP Enterprise Business			14,938			6	%		(5	%)
		Notebooks			5,808			(5	%)		3	%
		Desktops			3,896			1	%		(1	%)
		Workstations			535			43	%		1	%
		Other			210			(4	%)		3	%
		Personal Systems Group			10,449			(1	%)		2	%
		Supplies			4,358			7	%		(7	%)
		Commercial Hardware			1,464			13	%		(5	%)
		Consumer Hardware			808			(3	%)		8	%
		Imaging and Printing Group			6,630			7	%		(5	%)
		HP Financial Services			827			15	%		2	%
		Corporate Investments			78			30	%		(42	%)
		Total Segments			32,922			4	%		(3	%)
		Eliminations of intersegment net revenue and other			(620	)		36	%		(14	%)
Total HP Consolidated Revenue				$	32,302			4	%		(3	%)
(a)		Certain fiscal 2011 organizational reclassifications have been reflected retroactively to provide improved visibility and comparability. For each of the quarters in fiscal year 2010, the reclassifications resulted in the transfer of revenue among the Enterprise Servers, Storage and Networking, Services, HP Software and Corporate Investments financial reporting segments. Reclassifications between segments included the transfer of the networking business from Corporate Investments to Enterprise Servers, Storage and Networking, the transfer of the communications and media solutions business from HP Software to Services, and the transfer of the business intelligence business from HP Software to Corporate Investments. In addition, revenue was transferred among the business units within the Services and Personal Systems Group segments. There was no impact on the previously reported financial results for the HP Financial Services and Imaging and Printing Group segments or for the business units within the Imaging and Printing Group segment.

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
SEGMENT NON-GAAP OPERATING MARGIN SUMMARY DATA
(Unaudited)
				Three months ended			Change in Operating Margin (pts)
				January 31, 2011			Y/Y		Q/Q
Non-GAAP Operating Margin: (a)
		Services		16.0	%		0.3 pts		(0.4 pts)
		Enterprise Servers, Storage and Networking		14.7	%		1.5 pts		(0.4 pts)
		HP Software		17.6	%		(8.3 pts)		(16.6 pts)
		HP Enterprise Business		15.6	%		0.3 pts		(1.2 pts)
		Personal Systems Group		6.4	%		1.4 pts		0.9 pts
		Imaging and Printing Group		17.0	%		0.0 pts		(0.4 pts)
		HP Financial Services		9.6	%		0.3 pts		0.6 pts
		Corporate Investments		(234.6	%)		(141.3 pts)		(118.3 pts)
		Total Segments		12.2	%		0.3 pts		(0.6 pts)
Total HP Consolidated Non-GAAP Operating Margin				12.4	%		1.2 pts		0.4 pts
(a)		Certain fiscal 2011 organizational reclassifications have been reflected retroactively to provide improved visibility and comparability. For each of the quarters in fiscal year 2010, the reclassifications resulted in the transfer of revenue and operating profit among the Enterprise Servers, Storage and Networking, Services, HP Software and Corporate Investments financial reporting segments. Reclassifications between segments included the transfer of the networking business from Corporate Investments to Enterprise Servers, Storage and Networking, the transfer of the communications and media solutions business from HP Software to Services, and the transfer of the business intelligence business from HP Software to Corporate Investments. There was no impact on the previously reported financial results for the Personal Systems Group, HP Financial Services and Imaging and Printing Group segments.

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
CALCULATION OF NET EARNINGS PER SHARE
(Unaudited)
(In millions except per share amounts)
				Three months ended
				January 31, 2011			October 31, 2010			January 31, 2010
		Numerator:
		Net earnings		$	2,605		$	2,538		$	2,250
		Denominator:
		Weighted-average shares used to compute basic EPS			2,182			2,249			2,358
		Dilutive effect of employee stock plans			44			48			69
		Weighted-average shares used to compute diluted EPS			2,226			2,297			2,427
		Net earnings per share:
		Basic (a)		$	1.19		$	1.13		$	0.95
		Diluted (b)		$	1.17		$	1.10		$	0.93
(a)		Basic earnings per share was calculated based on net earnings and the weighted-average number of shares outstanding during the reporting period.
(b)		Diluted earnings per share included any dilutive effect of outstanding stock options, performance-based restricted units, restricted stock units and restricted stock.

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
CALCULATION OF NON-GAAP NET EARNINGS PER SHARE
(Unaudited)
(In millions except per share amounts)
				Three months ended
				January 31, 2011			October 31, 2010			January 31, 2010
		Numerator:
		Non-GAAP net earnings		$	3,030		$	3,064		$	2,594
		Denominator:
		Weighted-average shares used to compute basic EPS			2,182			2,249			2,358
		Dilutive effect of employee stock plans			44			48			69
		Weighted-average shares used to compute diluted EPS			2,226			2,297			2,427
		Non-GAAP net earnings per share:
		Basic (a)		$	1.39		$	1.36		$	1.10
		Diluted (b)		$	1.36		$	1.33		$	1.07
(a)		Basic non-GAAP earnings per share was calculated based on non-GAAP net earnings and the weighted-average number of shares outstanding during the reporting period.
(b)		Diluted non-GAAP earnings per share included any dilutive effect of outstanding stock options, performance-based restricted units, restricted stock units and restricted stock.

Use of Non-GAAP Financial Measures