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Financial Analysis for Savvy Investors: HP's Corporate Objectives and Market Position

Dive into HP's financial strategies, corporate objectives, and innovative product offerings that drive growth and shareholder value. Understand the competitive landscape, as HP navigates market changes, technological advancements, and economic conditions. Explore HP's performance metrics, revenue increases across various segments, and strategic relationships with key industry players. This comprehensive analysis sheds light on HP's resilience and adaptability, positioning it as a leader amidst evolving market dynamics.

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Financial Analysis for Savvy Investors: HP's Corporate Objectives and Market Position

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  1. HP Invents: Financial Analysis for the Savvy Investor HP Invents

  2. Corporate Objectives • Provide products, services and solutions of the highest quality and deliver more value to our customers that earns their respect and loyalty. • Achieve sufficient profit to finance our company growth, create value for our shareholders and provide the resources we need to achieve our other corporate objectives. • View change in the market as an opportunity to grow; to use our profits and our ability to develop and produce innovative products, services and solutions that satisfy emerging customer needs. HP Invents

  3. Strategic Areas of Involvement • Imaging and Personal Systems Group (IPSG) • HP Financial Services (HPFS) • Corporate Investments • Technology Solutions Group (TSG) • Enterprise Storage and Servers (ESS) • HP Services (HPS) • Software HP Invents

  4. Products and Services • Personal Computers and Access Devices • Apple IPod – by HP • Notebooks • IT Infrastructure • New Contract with NASDAQ • Global Services • Imaging and Printing • Relationship with Dreamworks (Shrek 2, et al.) • Relationship with National Gallery, London, to preserve Master Pieces HP Invents

  5. Competitors • Dell • Lexmark • Xerox • Veritas • IBM • BMC Software, Inc. HP Invents

  6. Risks • The ability to develop, manufacture and market products and services that meet customer requirements for innovation and quality. • The ability to effectively manage the transition of the company’s products and services due to technological innovations. • The ability to continue to license and enforce the company’s intellectual property rights on which the business depends. • The stability of general economic conditions, including but not limited to, foreign currency exchange rate risk. HP Invents

  7. The Old Guard • Carleton S. Fiorina – Former Chairman and Chief Executive Officer (1999-2005) • Primarily responsible for the 2002 acquisition of Compaq • January 24, 2005 – Management reorganizes, redistributing some of Fiorina’s day-to-day responsibilities • February 9, 2005 – Fiorina Resigns HP Invents

  8. The New Guard • Mark Hurd – New Chief Executive Officer and President, as of 3/29/05. • Previously spent 25 years with NCR Corp., culminating in two-year tenure as CEO • As CEO of NCR, generated 6.0 billion in revenue in fiscal year 2004, up 7 percent from ’03, and net income rose nearly fivefold to 290 million. HP Invents

  9. HP Financial Data HP Invents

  10. FY 2004 Revenue Report Actual Revenue ’05Y/Y Increase • Storage & Servers 4.047 billion 9% increase • HP Services 3.815 billion 20% increase • Software 240 million 18% increase • Personal Systems 6.873 billion 11% increase • Imaging & Printing 6.067 billion 3% increase • HP Financial Services 555 million 26% increase • All increases are from FY 2003 HP Invents

  11. FY 2004 Profit Report Profit% Profit Inc. from ‘03 • Storage & Servers 71 million 1.8% • HP Services 281 million 7.4% • Personal Systems 147 million 2.1% • Imaging & Printing 932 million 15.4% • HP Financial Services 45 million 8.1% HP Invents

  12. 2005 Statements • Q1 2005 Revenue of 21.5 billion, a 10% increase from Q1 2004 • HPQ estimates Q2 revenue to be between 21.2 – 21.6 billion • HPQ estimates Q2 non-GAAP Earnings Per Share to be 0.35 – 0.37 HP Invents

  13. HP v. Industry/Sector HP Invents

  14. The buzz on the street… • DELL stock is down 8% in the year to date • HPQ stock has seen an 11% increase since naming Mark Hurd the new CEO on March 29, 2005 • DELL has scaled back their estimated 2005 growth rate • DELL’s goal is to achieve 80 billion dollars of annual revenue by 2007… HPQ already exceeds that amount. • First Albany Analyst Services upgraded HPQ to a buy rating and estimates a $25 price target • HPQ was just awarded a 5 year contract with the United States Air Force HP Invents

  15. When Compared to Dell… HP Invents

  16. Quick Ratios HPQ Dell • Debt to Assets 0.5066 0.7206 • Debt to Equity 1.0270 2.5800 • Working Capital 14.313 billion 2.761 billion • Effective Tax Rate 14.18% 31.54% • ETR 5yr Average 16.45% 29.68% HP Invents

  17. S&P Evaluation HPQDELL • Earnings and Dividend Rank A- B+ • Fair Value Rank 4+ 5+ • Investability Quotient 95 100 • Technical Evaluation Bullish* Bearish** • Relative Strength Rank 84% 48% • * S&P Star Report has ranked HPQ bullish since March 2005 • ** S&P Star Report has ranked DELL bearish since February 2005 HP Invents

  18. 6 Month Stock Performance: HP v. Dell v. DJIA HP Invents

  19. Comparisons HP Invents

  20. WHY HP? • HP Makes More Things More Possible • HP is the leader in the Science of almost Limitless Possibilities • Because With HP - Everything Is Possible! HP Invents

  21. Questions?? HP Invents

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