HP’s open source webOS team, known as Enyo, will reportedly be leaving the company and joining Google, according to The Verge. The computer giant in December announced its failed webOS mobile operating system would move to an open-source model under the name Enyo, with version 1.0 slated for release in September 2012. The website’s sources claim the entire Enyo team will not be headed for Google, but Matt McNulty, the head of the project, will be among those departing. This wouldn’t be the first time the Internet giant has hired former webOS workers; Android’s current design chief Matias Duarte oversaw the creation of the user interface for the operating system while working at Palm. It is unclear if the Enyo team members will be joining the Android group or another Google project.

Read

Hewlett-Packard on Wednesday reported its second-quarter earnings that beat Wall Street’s expectations. Analysts expected the computer giant to report revenue of $29.92 billion and earnings of $0.91 per share, but the company surprised analysts when it reported earnings of $0.98 per share on sales of $30.69 billion. HP also confirmed new restructuring plans that will involve 27,000 job cuts, or 8% of the company’s workforce, and it expects to save more than $3 billion as a result. “We are making progress in our multi-year effort to make HP simpler, more efficient and better for customers, employees, and shareholders,” said Meg Whitman, HP president and chief executive officer. “This quarter we exceeded our previously provided outlook and are executing against our strategy, but we still have a lot of work to do.” Third-quarter guidance came in at $0.94-$0.97 per share, below expectations of $1.02 per share. HP’s full press release follows below.

HP Reports Second Quarter 2012 Results

PALO ALTO, CA, May 23, 2012 (MARKETWIRE via COMTEX) –HP (NYSE: HPQ)

--  Second quarter non-GAAP diluted earnings per share of $0.98, above
    previously provided outlook of $0.88 to $0.91 per share
--  Second quarter GAAP diluted earnings per share of $0.80, above
    previously provided outlook of $0.68 to $0.71 per share
--  Second quarter net revenue of $30.7 billion, down 3% from the
    prior-year period
--  Returned $601 million in cash to shareholders in the form of dividends
    and share repurchases
--  Company announces multi-year restructuring to fuel innovation and
    enable investment -- see separate press release for details

HP second quarter fiscal 2012 financial performance

                            Q2 FY12   Q2 FY11          Y/Y
GAAP net revenue ($B)         $30.7     $31.6         (3%)
GAAP operating margin          7.2%      9.4%   (2.2 pts.)
GAAP net earnings ($B)         $1.6      $2.3        (31%)
GAAP diluted EPS              $0.80     $1.05        (24%)
Non-GAAP operating margin      8.9%     11.3%   (2.4 pts.)
Non-GAAP net earnings ($B)     $1.9      $2.7        (28%)
Non-GAAP diluted EPS          $0.98     $1.24        (21%)

Information about HP’s use of non-GAAP financial information is provided under “Use of non-GAAP financial information” below.

HP (NYSE: HPQ) today announced financial results for its second fiscal quarter ended April 30, 2012. For the quarter, net revenue of $30.7 billion was down 3% year over year both as reported and when adjusted for the effects of currency.

GAAP diluted earnings per share (EPS) was $0.80, down 24% from the prior-year period. Non-GAAP diluted EPS was $0.98, down 21% from the prior-year period. Second quarter non-GAAP earnings information excludes after-tax costs of $356 million, or $0.18 per diluted share, related to amortization of purchased intangible assets, restructuring charges and acquisition-related charges.

“We are making progress in our multi-year effort to make HP simpler, more efficient and better for customers, employees, and shareholders,” said Meg Whitman, HP president and chief executive officer. “This quarter we exceeded our previously provided outlook and are executing against our strategy, but we still have a lot of work to do.”

Business Group Results

--  Personal Systems Group(PSG) revenue was flat year over year with a
    5.5% operating margin. Commercial revenue increased 3%, and Consumer
    revenue declined 4% while Workstations revenue was down 1% year over
    year. Desktop units were up 5%, notebook units were down 6% and total
    units were down 1%.
--  Services revenue declined 1% year over year with an 11.3% operating
    margin. Technology Services revenue was flat year over year,
    Application and Business Services revenue grew 1% and IT Outsourcing
    revenue declined 3% year over year.
--  Imaging and Printing Group (IPG) revenue declined 10% year over year
    with a 13.2% operating margin. Commercial hardware revenue was down 4%
    year over year with commercial printer units down 7%. Consumer
    hardware revenue was down 15% year over year with a 13% decline in
    printer units.
--  Enterprise Servers, Storage and Networking (ESSN) revenue declined 6%
    year over year with an 11.2% operating margin. Networking revenue was
    up 2%, Industry Standard Servers revenue was down 6%, Business
    Critical Systems revenue was down 23%, and Storage revenue was up 1%
    year over year.
--  HP Financial Services revenue grew 9% year over year driven by a 4%
    increase in net portfolio assets and a 5% increase in financing
    volume. The business delivered a 9.9% operating margin.
--  Software revenue grew 22% year over year with a 17.7% operating
    margin, including the results of Autonomy. Software revenue was driven
    by 7% license growth, 17% support growth, and 72% growth in services.
    Autonomy saw a significant decline in license revenue.

To help improve Autonomy’s performance, Bill Veghte, HP’s chief strategy officer and executive vice president of HP Software, will step in to lead Autonomy. Veghte is an experienced software leader who will help develop the right processes and discipline to scale Autonomy and fulfill its promise. Mike Lynch, Autonomy’s founder and executive vice president for Information Management, will leave HP after a transition period. The market and competitive positioning for Autonomy remain strong, particularly in cloud offerings.

Asset Management HP generated $2.5 billion in cash flow from operations in the second quarter. Inventory ended the quarter at $7.3 billion, with days of inventory up 2 days year over year to 28 days. Accounts receivable of $16.6 billion was down 4 days year over year to 49 days. Accounts payable ended the quarter at $12.9 billion, down 5 days from the prior-year period to 49 days. HP’s dividend payment of $0.12 per share in the second quarter resulted in cash usage of $251 million. HP also utilized $350 million of cash during the quarter to repurchase approximately 13 million shares of common stock in the open market. HP exited the quarter with $8.7 billion in gross cash.

Outlook In connection with the restructuring efforts discussed in a separate press release issued today (http://www8.hp.com/us/en/hp-news/press-release.html?id=1247078), HP expects to record a pre-tax charge of approximately $1.7 billion in fiscal 2012 that will be included in its GAAP financial results for that period. Of that amount, HP expects to record a pre-tax charge of approximately $1.0 billion in its third fiscal quarter. The cash impact associated with the restructuring efforts is expected to be approximately $400 million in fiscal year 2012. Through fiscal 2014, HP expects to record additional pre-tax charges approximating $1.8 billion that will be included in its GAAP financial results for the applicable periods.

In May 2012, HP committed to a change in its PC branding strategy. As a result, HP has commenced an asset impairment analysis to determine the current value of the Compaq trade name acquired in 2002. Based on the preliminary results of that analysis, HP expects to record an impairment charge of up to approximately $1.2 billion that will be included in its GAAP financial results for its third fiscal quarter. There will be no cash impact associated with the impairment charge.

For the third quarter of fiscal 2012, HP estimates non-GAAP diluted EPS to be in the range of $0.94 to $0.97 and GAAP diluted EPS to be in the range of $0.00 to $0.03.

Third quarter fiscal 2012 non-GAAP diluted EPS estimates exclude after-tax costs of approximately $0.94 per share, related primarily to the amortization and impairment of purchased intangible assets, restructuring charges, and acquisition-related charges.

For the full year fiscal 2012, HP now estimates non-GAAP diluted EPS to be in the range of $4.05 to $4.10 and GAAP diluted EPS to be in the range of $2.25 to $2.30.

Full year fiscal 2012 non-GAAP diluted EPS estimates exclude after-tax costs of approximately $1.80 per share, related primarily to the amortization and impairment of purchased intangible assets, restructuring charges and acquisition-related charges.

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 Q2 FY12 earnings conference call is accessible via an audio webcast at www.hp.com/investor/2012q2webcast.

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 net revenue, non-GAAP operating profit, non-GAAP operating margin, non-GAAP net earnings, non-GAAP diluted earnings per share, gross cash and free cash flow. 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 revenue, operating profit, operating margin, net earnings, diluted earnings per share, cash and cash equivalents or cash flow from operations 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, earnings per share, tax provisions, cash flows, benefit obligations, share repurchases, currency exchange rates, the impact of acquisitions or other financial items; any projections of the amount, timing or impact of cost savings, restructuring charges, early retirement programs, workforce reductions or impairment charges; any statements of the plans, strategies and objectives of management for future operations, including the execution of restructuring plans and any resulting cost savings or revenue or profitability improvements; any statements concerning the expected development, performance, market share or competitive performance 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 and retirement programs; the execution, timing and results of restructuring plans, including estimates and assumptions related to the cost and the anticipated benefits of implementing those 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, 2011 and HP’s other filings with the Securities and Exchange Commission, including HP’s Quarterly Report on Form 10-Q for the fiscal quarter ended January 31, 2012. 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 fiscal quarter ended April 30, 2012. In particular, determining HP’s actual tax balances and provisions as of April 30, 2012 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.

                  HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
               CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
                                (Unaudited)
                   (In millions except per share amounts)

                                                Three months ended
                                      -------------------------------------
                                       April 30,   January 31,   April 30,
                                          2012         2012         2011
                                      -----------  -----------  -----------

Net revenue                           $    30,693  $    30,036  $    31,632

Costs and Expenses:(a)
  Cost of sales                            23,541       23,313       23,832
  Research and development                    850          786          815
  Selling, general and administrative       3,540        3,367        3,425
  Amortization of purchased
   intangible assets                          470          466          413
  Restructuring charges                        53           40          158
  Acquisition-related charges                  17           22           21
                                      -----------  -----------  -----------
    Total costs and expenses               28,471       27,994       28,664
                                      -----------  -----------  -----------

Earnings from operations                    2,222        2,042        2,968

Interest and other, net                      (243)        (221)         (76)
                                      -----------  -----------  -----------

Earnings before taxes                       1,979        1,821        2,892

Provision for taxes                           386          353          588
                                      -----------  -----------  -----------

Net earnings                          $     1,593  $     1,468  $     2,304
                                      ===========  ===========  ===========

Net earnings per share:
  Basic                               $      0.80  $      0.74  $      1.07
  Diluted                             $      0.80  $      0.73  $      1.05

Cash dividends declared per share     $         -  $      0.24  $         -

Weighted-average shares used to
 compute net earnings per share:
  Basic                                     1,979        1,981        2,150
  Diluted                                   1,987        1,998        2,184

(a) In connection with organizational realignments implemented in the first
    quarter of fiscal year 2012, certain costs previously reported as Cost
    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
               CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
                                (Unaudited)
                   (In millions except per share amounts)

                                                       Six months ended
                                                   ------------------------
                                                           April 30,
                                                   ------------------------
                                                       2012         2011
                                                   -----------  -----------

Net revenue                                        $    60,729  $    63,934

Costs and expenses:(a)
  Cost of sales                                         46,854       48,213
  Research and development                               1,636        1,613
  Selling, general and administrative                    6,907        6,542
  Amortization of purchased intangible assets              936          838
  Restructuring charges                                     93          316
  Acquisition-related charges                               39           50
                                                   -----------  -----------
    Total costs and expenses                            56,465       57,572
                                                   -----------  -----------

Earnings from operations                                 4,264        6,362

Interest and other, net                                   (464)        (173)
                                                   -----------  -----------

Earnings before taxes                                    3,800        6,189

Provision for taxes                                        739        1,280
                                                   -----------  -----------

Net earnings                                       $     3,061  $     4,909
                                                   ===========  ===========

Net earnings per share:
  Basic                                            $      1.55  $      2.27
  Diluted                                          $      1.53  $      2.23

Cash dividends declared per share                  $      0.24  $      0.16

Weighted-average shares used to compute net
 earnings per share:
  Basic                                                  1,980        2,166
  Diluted                                                1,995        2,203

(a) In connection with organizational realignments implemented in the first
    quarter of fiscal year 2012, certain costs previously reported as Cost
    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              Three              Three
                     months             months             months
                     ended    Diluted   ended    Diluted   ended    Diluted
                     April   earnings  January  earnings   April   earnings
                      30,       per      31,       per      30,       per
                      2012     share     2012     share     2011     share
                    -------  --------  -------  --------  -------  --------

GAAP net earnings   $ 1,593  $   0.80  $ 1,468  $   0.73  $ 2,304  $   1.05

Non-GAAP
 adjustments:
  Amortization of
   purchased
   intangible
   assets               470      0.23      466      0.24      413      0.19
  Restructuring
   charges               53      0.03       40      0.02      158      0.07
  Acquisition-
   related charges       17      0.01       22      0.01       21      0.01
  Wind down of the
   webOS device
   business(a)          (36)    (0.02)       -         -        -         -
  Adjustments for
   taxes               (148)    (0.07)    (164)    (0.08)    (179)    (0.08)
                    -------  --------  -------  --------  -------  --------
Non-GAAP net
 earnings           $ 1,949  $   0.98  $ 1,832  $   0.92  $ 2,717  $   1.24
                    =======  ========  =======  ========  =======  ========

GAAP earnings from
 operations         $ 2,222            $ 2,042            $ 2,968

Non-GAAP
 adjustments:
  Amortization of
   purchased
   intangible
   assets               470                466                413
  Restructuring
   charges               53                 40                158
  Acquisition-
   related charges       17                 22                 21
  Wind down of the
   webOS device
   business(a)          (36)                 -                  -
                    -------            -------            -------
Non-GAAP earnings
 from operations    $ 2,726            $ 2,570            $ 3,560
                    =======            =======            =======

GAAP operating
 margin                   7%                 7%                 9%
Non-GAAP
 adjustments              2%                 2%                 2%
                    -------            -------            -------

Non-GAAP operating
 margin                   9%                 9%                11%
                    =======            =======            =======

(a) Primarily includes adjustments to expenses for supplier-related
    obligations related to winding down the webOS device business.

                  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)

                             Six months              Six months
                               ended       Diluted     ended       Diluted
                             April 30,    earnings   April 30,    earnings
                                2012      per share     2011      per share
                             ----------  ----------  ----------  ----------

GAAP net earnings            $    3,061  $     1.53  $    4,909  $     2.23

Non-GAAP adjustments:
  Amortization of purchased
   intangible assets                936        0.47         838        0.39
  Restructuring charges              93        0.05         316        0.14
  Acquisition-related
   charges                           39        0.02          50        0.02
  Wind down of the webOS
   device business(a)               (36)      (0.02)          -           -
  Adjustments for taxes            (312)      (0.15)       (366)      (0.17)
                             ----------  ----------  ----------  ----------
Non-GAAP net earnings        $    3,781  $     1.90  $    5,747  $     2.61
                             ==========  ==========  ==========  ==========

GAAP earnings from
 operations                  $    4,264              $    6,362

Non-GAAP adjustments:
  Amortization of purchased
   intangible assets                936                     838
  Restructuring charges              93                     316
  Acquisition-related
   charges                           39                      50
  Wind down of the webOS
   device business(a)               (36)                      -
                             ----------              ----------
Non-GAAP earnings from
 operations                  $    5,296              $    7,566
                             ==========              ==========

GAAP operating margin                 7%                     10%
Non-GAAP adjustments                  2%                      2%
                             ----------              ----------

Non-GAAP operating margin             9%                     12%
                             ==========              ==========

(a) Primarily includes adjustments to expenses for supplier-related
    obligations related to winding down the webOS device business.

                  HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
                   CONSOLIDATED CONDENSED BALANCE SHEETS
                               (In millions)

                                                    April 30,   October 31,
                                                       2012         2011
                                                   -----------  -----------
                                                   (unaudited)
ASSETS

Current assets:
  Cash and cash equivalents                        $     8,311  $     8,043
  Accounts receivable                                   16,609       18,224
  Financing receivables                                  3,139        3,162
  Inventory                                              7,306        7,490
  Other current assets                                  14,324       14,102
                                                   -----------  -----------
    Total current assets                                49,689       51,021
                                                   -----------  -----------

Property, plant and equipment                           12,236       12,292

Long-term financing receivables and other assets        11,018       10,755

Goodwill and purchased intangible assets                54,746       55,449
                                                   -----------  -----------

Total assets                                       $   127,689  $   129,517
                                                   ===========  ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Notes payable and short-term borrowings          $     4,252  $     8,083
  Accounts payable                                      12,900       14,750
  Employee compensation and benefits                     3,609        3,999
  Taxes on earnings                                        871        1,048
  Deferred revenue                                       7,582        7,449
  Other accrued liabilities                             13,585       15,113
                                                   -----------  -----------
    Total current liabilities                           42,799       50,442
                                                   -----------  -----------

Long-term debt                                          25,825       22,551

Other liabilities                                       17,368       17,520

Stockholders' equity:
  HP stockholders' equity                               41,288       38,625
  Non-controlling interests                                409          379
                                                   -----------  -----------
    Total stockholders' equity                          41,697       39,004
                                                   -----------  -----------

Total liabilities and stockholders' equity         $   127,689  $   129,517
                                                   ===========  ===========

                  HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
              CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                (Unaudited)
                               (In millions)

                                                 Three months   Six months
                                                     ended         ended
                                                   April 30,     April 30,
                                                     2012          2012
                                                 ------------  ------------

Cash flows from operating activities:
  Net earnings                                   $      1,593  $      3,061
  Adjustments to reconcile net earnings to net
   cash provided by operating activities:
    Depreciation and amortization                       1,285         2,588
    Stock-based compensation expense                      169           344
    Provision for bad debt and inventory                   95           147
    Restructuring charges                                  53            93
    Deferred taxes on earnings                            (45)         (155)
    Excess tax benefit from stock-based
     compensation                                          (1)          (12)
    Other, net                                            196           240

    Changes in operating assets and liabilities:
      Accounts and financing receivables                 (832)        1,479
      Inventory                                           (91)           89
      Accounts payable                                    525        (1,851)
      Taxes on earnings                                   (42)          (54)
      Restructuring                                      (100)         (274)
      Other assets and liabilities                       (332)       (2,029)
                                                 ------------  ------------
        Net cash provided by operating
         activities                                     2,473         3,666
                                                 ------------  ------------

Cash flows from investing activities:
    Investment in property, plant and equipment        (1,080)       (1,963)
    Proceeds from sale of property, plant and
     equipment                                            128           224
    Purchases of available-for-sale securities
     and other investments                               (565)         (565)
    Maturities and sales of available-for-sale
     securities and other investments                     250           346
    Payments made in connection with business
     acquisitions, net of cash acquired                     -          (141)
    Proceeds from business divestiture, net                 -            81
                                                 ------------  ------------
      Net cash used in investing activities            (1,267)       (2,018)
                                                 ------------  ------------

Cash flows from financing activities:
    Repayment of commercial paper and notes
     payable, net                                        (185)       (2,792)
    Issuance of debt                                    2,017         5,052
    Payment of debt                                    (2,561)       (2,661)
    Issuance of common stock under employee
     stock plans                                          321           634
    Repurchase of common stock                           (350)       (1,130)
    Excess tax benefit from stock-based
     compensation                                           1            12
    Cash dividends paid                                  (251)         (495)
                                                 ------------  ------------
      Net cash used in financing activities            (1,008)       (1,380)
                                                 ------------  ------------

Increase in cash and cash equivalents                     198           268
Cash and cash equivalents at beginning of period        8,113         8,043
                                                 ------------  ------------
Cash and cash equivalents at end of period       $      8,311  $      8,311
                                                 ============  ============

                  HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
                            SEGMENT INFORMATION
                                (Unaudited)
                               (In millions)

                                                Three months ended
                                      -------------------------------------
                                       April 30,   January 31,   April 30,
                                          2012         2012         2011
                                      -----------  -----------  -----------

Net revenue:(a)

  Personal Systems Group              $     9,452  $     8,873  $     9,415
  Services                                  8,831        8,626        8,916
  Imaging and Printing Group                6,132        6,258        6,843
  Enterprise Servers, Storage and
   Networking                               5,211        5,018        5,516
  Software                                    970          946          797
  HP Financial Services                       968          950          885
  Corporate Investments                        18           58           42
                                      -----------  -----------  -----------
    Total segments                         31,582       30,729       32,414
  Eliminations of intersegment net
   revenue and other                         (889)        (693)        (782)
                                      -----------  -----------  -----------

    Total HP consolidated net revenue $    30,693  $    30,036  $    31,632
                                      ===========  ===========  ===========

Earnings before taxes:(a)

  Personal Systems Group              $       524  $       464  $       533
  Services                                    997          905        1,372
  Imaging and Printing Group                  808          761        1,136
  Enterprise Servers, Storage and
   Networking                                 585          562          760
  Software                                    172          162          158
  HP Financial Services                        96           91           83
  Corporate Investments                       (49)         (48)        (199)
                                      -----------  -----------  -----------
    Total segment earnings from
     operations                             3,133        2,897        3,843

  Corporate and unallocated costs and
   eliminations                              (203)        (153)        (153)
  Unallocated costs related to stock-
   based compensation expense                (168)        (174)        (130)
  Amortization of purchased
   intangible assets                         (470)        (466)        (413)
  Restructuring charges                       (53)         (40)        (158)
  Acquisition-related charges                 (17)         (22)         (21)
  Interest and other, net                    (243)        (221)         (76)
                                      -----------  -----------  -----------

    Total HP consolidated earnings
     before taxes                     $     1,979  $     1,821  $     2,892
                                      ===========  ===========  ===========

(a) Certain fiscal 2012 organizational reclassifications have been reflected
    retroactively to provide improved visibility and comparability. For each
    of the quarters in fiscal year 2011, the reclassifications resulted in
    the transfer of revenue and operating profit among the Services, Imaging
    and Printing Group, Enterprise Servers, Storage and Networking, Software
    and Corporate Investments financial reporting segments.
    Reclassifications between segments included the transfer of the Indigo
    Scitex support and the LaserJet and enterprise solutions trade support
    businesses from Services to the Imaging and Printing Group, the transfer
    of the business intelligence services business from Corporate
    Investments to Services, the transfer of the information management
    services business from Software to Services, and the transfer of the
    TippingPoint business from Enterprise Servers, Storage and Networking to
    Software. There was no impact on the previously reported financial
    results for the Personal Systems Group and HP Financial Services
    segments.

                  HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
                            SEGMENT INFORMATION
                                (Unaudited)
                               (In millions)

                                                       Six months ended
                                                           April 30,
                                                   ------------------------
                                                       2012         2011
                                                   -----------  -----------

Net revenue:(a)

  Personal Systems Group                           $    18,325  $    19,864
  Services                                              17,457       17,445
  Imaging and Printing Group                            12,390       13,574
  Enterprise Servers, Storage and Networking            10,229       11,115
  Software                                               1,916        1,522
  HP Financial Services                                  1,918        1,712
  Corporate Investments                                     76          104
                                                   -----------  -----------
    Total Segments                                      62,311       65,336
  Eliminations of intersegment net revenue and
   other                                                (1,582)      (1,402)
                                                   -----------  -----------

    Total HP consolidated net revenue              $    60,729  $    63,934
                                                   ===========  ===========

Earnings before taxes:(a)

  Personal Systems Group                           $       988  $     1,205
  Services                                               1,902        2,753
  Imaging and Printing Group                             1,569        2,255
  Enterprise Servers, Storage and Networking             1,147        1,590
  Software                                                 334          278
  HP Financial Services                                    187          162
  Corporate Investments                                    (97)        (377)
                                                   -----------  -----------
    Total segment earnings from operations               6,030        7,866

  Corporate and unallocated costs and eliminations        (356)          (4)
  Unallocated costs related to stock-based
   compensation expense                                   (342)        (296)
  Amortization of purchased intangible assets             (936)        (838)
  Restructuring charges                                    (93)        (316)
  Acquisition-related charges                              (39)         (50)
  Interest and other, net                                 (464)        (173)
                                                   -----------  -----------

    Total HP consolidated earnings before taxes    $     3,800  $     6,189
                                                   ===========  ===========

(a) Certain fiscal 2012 organizational reclassifications have been reflected
    retroactively to provide improved visibility and comparability. For each
    of the quarters in fiscal year 2011, the reclassifications resulted in
    the transfer of revenue and operating profit among the Services, Imaging
    and Printing Group, Enterprise Servers, Storage and Networking, Software
    and Corporate Investments financial reporting segments.
    Reclassifications between segments included the transfer of the Indigo
    Scitex support and the LaserJet and enterprise solutions trade support
    businesses from Services to the Imaging and Printing Group, the transfer
    of the business intelligence services business from Corporate
    Investments to Services, the transfer of the information management
    services business from Software to Services, and the transfer of the
    TippingPoint business from Enterprise Servers, Storage and Networking to
    Software. There was no impact on the previously reported financial
    results for the Personal Systems Group and HP Financial Services
    segments.

                 HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
                    SEGMENT / BUSINESS UNIT INFORMATION
                                (Unaudited)
                               (In millions)

                                                               Growth rate
                                  Three months ended               (%)
                        -------------------------------------  -----------
                         April 30,   January 31,   April 30,
                            2012         2012         2011      Q/Q    Y/Y
                        -----------  -----------  -----------  ----   ----

Net revenue:(a)

  Personal Systems
   Group
    Notebooks           $     4,900  $     4,942  $     5,039    (1%)   (3%)
    Desktops                  3,827        3,206        3,641    19%     5%
    Workstations                537          535          541     0%    (1%)
    Other                       188          190          194    (1%)   (3%)
                        -----------  -----------  -----------
      Total Personal
       Systems Group          9,452        8,873        9,415     7%     0%
                        -----------  -----------  -----------

  Services
    Infrastructure
     Technology
     Outsourcing              3,669        3,701        3,786    (1%)   (3%)
    Technology Services       2,638        2,562        2,629     3%     0%
    Application and
     Business
     Services(b)              2,524        2,363        2,501     7%     1%
                        -----------  -----------  -----------
      Total Services          8,831        8,626        8,916     2%    (1%)
                        -----------  -----------  -----------

  Imaging and Printing
   Group
    Supplies                  4,060        4,079        4,612     0%   (12%)
    Commercial Hardware       1,479        1,489        1,536    (1%)   (4%)
    Consumer Hardware           593          690          695   (14%)  (15%)
                        -----------  -----------  -----------
      Total Imaging and
       Printing Group         6,132        6,258        6,843    (2%)  (10%)
                        -----------  -----------  -----------

  Enterprise Servers,
   Storage and
   Networking
    Industry Standard
     Servers                  3,186        3,072        3,387     4%    (6%)
    Storage                     990          955          980     4%     1%
    Business Critical
     Systems                    421          405          546     4%   (23%)
    Networking                  614          586          603     5%     2%
                        -----------  -----------  -----------
      Total Enterprise
       Servers, Storage
       and Networking         5,211        5,018        5,516     4%    (6%)
                        -----------  -----------  -----------

  Software                      970          946          797     3%    22%
                        -----------  -----------  -----------

  HP Financial Services         968          950          885     2%     9%
                        -----------  -----------  -----------

  Corporate Investments          18           58           42   (69%)  (57%)
                        -----------  -----------  -----------
    Total segments           31,582       30,729       32,414     3%    (3%)
                        -----------  -----------  -----------

  Elimination of
   intersegment net
   revenue and other           (889)        (693)        (782)   28%    14%
                        -----------  -----------  -----------

    Total HP
     consolidated net
     revenue            $    30,693  $    30,036  $    31,632     2%    (3%)
                        ===========  ===========  ===========

(a) Certain fiscal 2012 organizational reclassifications have been reflected
    retroactively to provide improved visibility and comparability. For each
    of the quarters in fiscal year 2011, the reclassifications resulted in
    the transfer of revenue among the Services, Imaging and Printing Group,
    Enterprise Servers, Storage and Networking, Software and Corporate
    Investments financial reporting segments. Reclassifications between
    segments included the transfer of Indigo Scitex support and the LaserJet
    and enterprise solutions trade support businesses from Services to the
    Imaging and Printing Group, the transfer of the business intelligence
    services business from Corporate Investments to Services, the transfer
    of the information management services business from Software to
    Services, and the transfer of the TippingPoint business from Enterprise
    Servers, Storage and Networking to Software. In addition, revenue was
    transferred among the business units within the Services segment. There
    was no impact on the previously reported financial results for the
    Personal Systems Group and HP Financial Services segments.

(b) The former Application Services, Business Process Outsourcing and Other
    Services business units were consolidated into a new Application and
    Business Services business unit in fiscal 2012.

                  HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
                    SEGMENT / BUSINESS UNIT INFORMATION
                                (Unaudited)
                               (In millions)

                                                       Six months ended
                                                           April 30,
                                                   ------------------------
                                                       2012         2011
                                                   -----------  -----------

Net revenue:(a)

  Personal Systems Group
    Notebooks                                      $     9,842  $    10,847
    Desktops                                             7,033        7,537
    Workstations                                         1,072        1,076
    Other                                                  378          404
                                                   -----------  -----------
      Total Personal Systems Group                      18,325       19,864
                                                   -----------  -----------

  Services
    Infrastructure Technology Outsourcing                7,370        7,430
    Technology Services                                  5,200        5,143
    Application and Business Services(b)                 4,887        4,872
                                                   -----------  -----------
      Total Services                                    17,457       17,445
                                                   -----------  -----------

  Imaging and Printing Group
    Supplies                                             8,139        8,970
    Commercial Hardware                                  2,968        3,101
    Consumer Hardware                                    1,283        1,503
                                                   -----------  -----------
      Total Imaging and Printing Group                  12,390       13,574
                                                   -----------  -----------

  Enterprise Servers, Storage and Networking
    Industry Standard Servers                            6,258        6,835
    Storage                                              1,945        1,992
    Business Critical Systems                              826        1,101
    Networking                                           1,200        1,187
                                                   -----------  -----------
      Total Enterprise Servers, Storage and
       Networking                                       10,229       11,115
                                                   -----------  -----------

  Software                                               1,916        1,522
                                                   -----------  -----------

  HP Financial Services                                  1,918        1,712
                                                   -----------  -----------

  Corporate Investments                                     76          104
                                                   -----------  -----------
    Total segments                                      62,311       65,336
                                                   -----------  -----------

  Elimination of intersegment net revenue and
   other                                                (1,582)      (1,402)
                                                   -----------  -----------

    Total HP consolidated net revenue              $    60,729  $    63,934
                                                   ===========  ===========

(a) Certain fiscal 2012 organizational reclassifications have been reflected
    retroactively to provide improved visibility and comparability. For each
    of the quarters in fiscal year 2011, the reclassifications resulted in
    the transfer of revenue among the Services, Imaging and Printing Group,
    Enterprise Servers, Storage and Networking, Software and Corporate
    Investments financial reporting segments. Reclassifications between
    segments included the transfer of Indigo Scitex support and the LaserJet
    and enterprise solutions trade support businesses from Services to the
    Imaging and Printing Group, the transfer of the business intelligence
    services business from Corporate Investments to Services, the transfer
    of the information management services business from Software to
    Services, and the transfer of the TippingPoint business from Enterprise
    Servers, Storage and Networking to Software. In addition, revenue was
    transferred among the business units within the Services segment. There
    was no impact on the previously reported financial results for the
    Personal Systems Group and HP Financial Services segments.

(b) The former Application Services, Business Process Outsourcing and Other
    Services business units were consolidated into a new Application and
    Business Services business unit in fiscal 2012.

                  HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
               SEGMENT NON-GAAP OPERATING MARGIN SUMMARY DATA
                                (Unaudited)
                               (In millions)

                                      Three months     Change in Operating
                                          ended           Margin (pts)
                                      ------------   ----------------------
                                       April 30,
                                          2012           Q/Q         Y/Y
                                      ------------   ----------  ----------

Non-GAAP operating margin:(a)
  Personal Systems Group                       5.5%     0.3 pts    (0.2 pts)
  Services                                    11.3%     0.8 pts    (4.1 pts)
  Imaging and Printing Group                  13.2%     1.0 pts    (3.4 pts)
  Enterprise Servers, Storage and
   Networking                                 11.2%     0.0 pts    (2.6 pts)
  Software                                    17.7%     0.6 pts    (2.1 pts)
  HP Financial Services                        9.9%     0.3 pts     0.5 pts
  Corporate Investments                     (472.2%) (389.4 pts)    1.6 pts
    Total segments                             9.8%     0.4 pts    (2.1 pts)

    Total HP consolidated non-GAAP
     operating margin                          8.9%     0.3 pts    (2.4 pts)

(a) Certain fiscal 2012 organizational reclassifications have been reflected
    retroactively to provide improved visibility and comparability. For each
    of the quarters in fiscal year 2011, the reclassifications resulted in
    the transfer of revenue and operating profit among the Services, Imaging
    and Printing Group, Enterprise Servers, Storage and Networking, Software
    and Corporate Investments financial reporting segments.
    Reclassifications between segments included the transfer of Indigo
    Scitex support and the LaserJet and enterprise solutions trade support
    businesses from Services to the Imaging and Printing Group, the transfer
    of the business intelligence services business from Corporate
    Investments to Services, the transfer of the information management
    services business from Software to Services, and the transfer of the
    TippingPoint business from Enterprise Servers, Storage and Networking to
    Software. There was no impact on the previously reported financial
    results for the Personal Systems Group and HP Financial Services
    segments.

                  HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
                    CALCULATION OF NET EARNINGS PER SHARE
                                 (Unaudited)
                   (In millions except per share amounts)

                                                 Three months ended
                                       -------------------------------------
                                        April 30,   January 31,   April 30,
                                           2012         2012         2011
                                       -----------  -----------  -----------

Numerator:
  GAAP net earnings                    $     1,593  $     1,468  $     2,304
                                       ===========  ===========  ===========

  Non-GAAP net earnings                $     1,949  $     1,832  $     2,717
                                       ===========  ===========  ===========

Denominator:
  Weighted-average shares used to
   compute basic EPS                         1,979        1,981        2,150
  Dilutive effect of employee stock
   plans                                         8           17           34
                                       -----------  -----------  -----------
    Weighted-average shares used to
     compute diluted EPS                     1,987        1,998        2,184
                                       ===========  ===========  ===========

GAAP net earnings per share:
  Basic(a)                             $      0.80  $      0.74  $      1.07
  Diluted(c)                           $      0.80  $      0.73  $      1.05

Non-GAAP net earnings per share:
  Basic(b)                             $      0.98  $      0.92  $      1.26
  Diluted(c)                           $      0.98  $      0.92  $      1.24

(a) GAAP basic earnings per share were calculated based on GAAP net earnings
    and the weighted-average number of shares outstanding during the
    reporting period.

(b) Non-GAAP basic earnings per share were calculated based on non-GAAP net
    earnings and the weighted-average number of shares outstanding during
    the reporting period.

(c) Diluted net 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 NET EARNINGS PER SHARE
                                 (Unaudited)
                   (In millions except per share amounts)

                                                        Six months ended
                                                            April 30,
                                                    ------------------------
                                                        2012         2011
                                                    -----------  -----------

Numerator:
  GAAP net earnings                                 $     3,061  $     4,909
                                                    ===========  ===========

  Non-GAAP net earnings                             $     3,781  $     5,747
                                                    ===========  ===========

Denominator:
  Weighted-average shares used to compute basic EPS       1,980        2,166
  Dilutive effect of employee stock plans                    15           37
                                                    -----------  -----------
    Weighted-average shares used to compute diluted
     EPS                                                  1,995        2,203
                                                    ===========  ===========

GAAP net earnings per share:
  Basic(a)                                          $      1.55  $      2.27
  Diluted(c)                                        $      1.53  $      2.23

Non-GAAP net earnings per share:
  Basic(b)                                          $      1.91  $      2.65
  Diluted(c)                                        $      1.90  $      2.61

(a) GAAP basic earnings per share were calculated based on GAAP net earnings
    and the weighted-average number of shares outstanding during the
    reporting period.

(b) Non-GAAP basic earnings per share were calculated based on non-GAAP net
    earnings and the weighted-average number of shares outstanding during
    the reporting period.

(c) Diluted net 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 To supplement HP’s consolidated condensed financial statements presented on a GAAP basis, HP provides non-GAAP net revenue, non-GAAP operating profit, non-GAAP operating margin, non-GAAP net earnings, non-GAAP diluted earnings per share, gross cash and free cash flow. HP also provides forecasts of non-GAAP diluted earnings per share. These non-GAAP financial measures are not in accordance with, or an alternative for, generally accepted accounting principles in the United States. The GAAP measure most directly comparable to non-GAAP net revenue is net revenue. The GAAP measure most directly comparable to non-GAAP operating profit is earnings from operations. The GAAP measure most directly comparable to non-GAAP operating margin is operating margin. The GAAP measure most directly comparable to non-GAAP net earnings is net earnings. The GAAP measure most directly comparable to non-GAAP diluted earnings per share is diluted net earnings per share. The GAAP measure most directly comparable to gross cash is cash and cash equivalents. The GAAP measure most directly comparable to free cash flow is cash flow from operations. Reconciliations of each of these non-GAAP financial measures to GAAP information are included in the tables above.

Use and Economic Substance of Non-GAAP Financial Measures Used by HP

Non-GAAP net revenue reflects the elimination of contra revenue associated with sales incentive programs implemented in the fourth fiscal quarter of 2011 in connection with the wind down of HP’s webOS device business, net of webOS device revenue for the period. Non-GAAP operating profit and non-GAAP operating margin are defined to exclude the effects of any restructuring charges, charges relating to the impairment of goodwill and purchased intangible assets, charges relating to the amortization of purchased intangible assets, and acquisition-related charges recorded during the relevant period. Non-GAAP net earnings and non-GAAP diluted earnings per share consist of net earnings or diluted net earnings per share excluding those same charges. In addition, non-GAAP net earnings and non-GAAP diluted earnings per share are adjusted by the amount of additional taxes or tax benefit associated with each non-GAAP item. HP’s management uses these non-GAAP financial measures for purposes of evaluating HP’s historical and prospective financial performance, as well as HP’s performance relative to its competitors. HP’s management also uses these non-GAAP measures to further its own understanding of HP’s segment operating performance. HP believes that excluding those items mentioned above from these non-GAAP financial measures allows HP management to better understand HP’s consolidated financial performance in relationship to the operating results of HP’s segments, as management does not believe that the excluded items are reflective of ongoing operating results. More specifically, HP’s management excludes each of those items mentioned above for the following reasons:

--  In the fourth quarter of fiscal 2011, HP announced that it would wind
    down its webOS device business. Non-GAAP net revenue reported in the
    fourth quarter of fiscal 2011 reflects the elimination of contra
    revenue associated with sales incentive programs implemented in
    connection with the wind down of that business, net of webOS device
    revenue for the period. Because the winding down of HP businesses is
    inconsistent in amount and frequency, HP believes that eliminating
    these amounts for purposes of calculating non-GAAP net revenue
    facilitates a more meaningful evaluation of HP's current operating
    performance and comparisons to HP's past and future operating
    performance.
--  Goodwill is the excess of the purchase price of acquired companies
    over the estimated fair value of the tangible and intangible assets
    acquired and liabilities assumed. Purchased intangible assets consist
    primarily of customer contracts, customer lists, distribution
    agreements, technology patents, and products, trademarks and trade
    names purchased in connection with acquisitions. In the fourth quarter
    of fiscal 2011, HP recorded impairment charges to goodwill and certain
    intangible assets associated with the acquisition of Palm Inc. The
    charges relate to HP's decision to wind-down the webOS device
    business. Impairment charges are inconsistent in amount and frequency.
    HP excludes these charges for purposes of calculating these non-GAAP
    measures to facilitate a more meaningful evaluation of HP's current
    operating performance and comparisons to HP's past and future
    operating performance.
--  HP incurs charges relating to the amortization of purchased
    intangibles. HP also incurs charges relating to the amortization of
    amounts assigned to intangible assets to be used in research and
    development projects. All of those charges are included in HP's GAAP
    presentation of earnings from operations, operating margin, net
    earnings and net earnings per share. Such charges are inconsistent in
    amount and frequency and are significantly impacted by the timing and
    magnitude of HP's acquisitions. Consequently, HP excludes these
    charges for purposes of calculating these non-GAAP measures to
    facilitate a more meaningful evaluation of HP's current operating
    performance and comparisons to HP's past and future operating
    performance.
--  Restructuring charges consist of costs associated with a formal
    restructuring plan and are primarily related to (i) employee
    termination costs and benefits, and (ii) costs to vacate duplicative
    facilities. HP excludes these restructuring costs (and any reversals
    of charges recorded in prior periods) for purposes of calculating
    these non-GAAP measures because it believes that these historical
    costs do not reflect expected future operating expenses and do not
    contribute to a meaningful evaluation of HP's current operating
    performance or comparisons to HP's past and future operating
    performance.
--  HP incurs costs related to its acquisitions, most of which are treated
    as non-capitalized expenses. Because non-capitalized,
    acquisition-related expenses are inconsistent in amount and frequency
    and are significantly impacted by the timing and nature of HP's
    acquisitions, HP believes that eliminating the non-capitalized
    expenses for purposes of calculating these non-GAAP measures
    facilitates a more meaningful evaluation of HP's current operating
    performance and comparisons to HP's past and future operating
    performance.

Gross cash is a non-GAAP measure that is defined as cash and cash equivalents plus short-term investments and certain long-term investments that may be liquidated within 90 days pursuant to the terms of existing put options or similar rights. Free cash flow is defined as cash flow from operations less net capital expenditures. HP’s management uses gross cash and free cash flow for the purpose of determining the amount of cash available for investment in HP’s businesses, funding strategic acquisitions, repurchasing stock and other purposes. HP’s management also uses gross cash and free cash flow for the purposes of evaluating HP’s historical and prospective liquidity, as well as to further its own understanding of HP’s segment operating results. Because gross cash includes liquid assets that are not included in GAAP cash and cash equivalents, HP believes that gross cash provides a more accurate and complete assessment of HP’s liquidity and segment operating results. Because free cash flow includes the effect of capital expenditures that are not reflected in GAAP cash flow from operations, HP believes that free cash flow provides a more accurate and complete assessment of HP’s liquidity and capital resources.

Material Limitations Associated with Use of Non-GAAP Financial Measures 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. Some of the limitations in relying on these non-GAAP financial measures are:

--  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 operating
    margin, non-GAAP net earnings and non-GAAP diluted earnings per share
    and therefore does not reflect the full economic effect of the loss in
    value of those intangible assets.
--  Items such as restructuring charges that are excluded from non-GAAP
    operating profit, non-GAAP operating margin, non-GAAP net earnings and
    non-GAAP diluted earnings per share can have a material impact on cash
    flows and earnings per share.
--  HP may not be able to liquidate immediately the long-term investments
    included in gross cash, which may limit the usefulness of gross cash
    as a liquidity measure.
--  Other companies may calculate non-GAAP net revenue, non-GAAP operating
    profit, non-GAAP operating margin, non-GAAP net earnings, non-GAAP
    diluted earnings per share, gross cash and free cash flow differently
    than HP does, limiting the usefulness of those measures for
    comparative purposes.

Compensation for Limitations Associated with Use of Non-GAAP Financial Measures HP compensates for the limitations on its use of non-GAAP net revenue, non-GAAP operating profit, non-GAAP operating margin, non-GAAP net earnings, non-GAAP diluted earnings per share, gross cash and free cash flow by relying primarily on its GAAP results and using non-GAAP financial measures only supplementally. HP also provides robust and detailed reconciliations of each non-GAAP financial measure to its most directly comparable GAAP measure within this press release and in other written materials that include these non-GAAP financial measures, and HP encourages investors to review carefully those reconciliations.

Usefulness of Non-GAAP Financial Measures to Investors HP believes that providing non-GAAP net revenue, non-GAAP operating profit, non-GAAP operating margin, non-GAAP net earnings, non-GAAP diluted earnings per share, gross cash and free cash flow to investors 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. HP further believes that providing this information better enables HP’s investors to understand HP’s operating performance and to evaluate the efficacy of the methodology and information used by management to evaluate and measure such performance. Disclosure of these non-GAAP financial measures also facilitates comparisons of HP’s operating performance with the performance of other companies in HP’s industry that supplement their GAAP results with non-GAAP financial measures that are calculated in a similar manner.

Hewlett-Packard is reportedly mulling a massive workforce reduction that will see as many as 25,000 jobs cut from the company. Bloomberg cites unnamed sources in reporting on the potential layoffs, which would amount to 8% of HP’s global workforce. Between 10,000 and 15,000 of the cuts could come from HP’s enterprise services group, and several thousand of the workers affected by the possible layoffs may be offered early-retirement packages. HP confirmed in March that it would undergo a major reorganization that would see its Personal Systems Group merge with its Imaging and Printing Group, but it did not announce any wide-scale layoffs at that time. The struggling vendor will report its results for the second fiscal quarter next Wednesday.

Read

Intel is expected to move up the announcement of its next-generation Ivy Bridge processors from the original date of April 29th to April 23rd, Digitimes reported on Thursday. ASUS, Acer, Lenovo and Hewlett-Packard are all preparing to release their second generation of ultrabooks in May, with average prices expected to “rapidly” drop from $999 to $699. To promote ultrabooks, Intel has also reportedly set up a $300 million fund to assist its partners in ultrabook design as well as research and development. Earlier rumors have suggested that Apple is planning to refresh its iMac family of computers with Intel’s 22nm-based Core i5 and Core i7 Ivy Bridge processors in June or July. The Cupertino-based company is also said to be ramping up production in preparation for thinner 13- and 15-inch MacBook Pro models.

Read

Glassdoor on Friday revealed its latest list of the “Top 25 Highest Rated CEOs of 2012.” Apple’s Tim Cook took the top spot with a 97% approval rating, leading Ernst & Young’s Jim Turley, Qualcomm’s Paul Jacobs and Google’s Larry Page. “I think leadership is doing an amazing job,” said one Apple employee. “We have the best management team anywhere.” When Steve Jobs stepped down in August 2011, the late Apple co-founder garnered a cumulative approval rating of 97%, however Cook leads Jobs’s rating of 95% from March 2010 to March 2011. While it has been a tough year for Hewlett-Packard, the company’s new CEO Meg Whitman also made the list with an 80% approval rating, placing her in the  No. 24 spot. Glassdoor bases the list entirely on feedback from anonymous employees who were asked one question — do they approve of the way their CEO is leading the company?

Read

Hewlett-Packard on Wednesday confirmed earlier reports of a major reorganization within the company. The firm plans to merge its Personal Systems Group, responsible for PCs, with its Imaging and Printing Group. Current boss of the company’s printer division Vyomesh Joshi will retire after 31 years at the company, and current PSG executive vice president Todd Bradley will run the combined operations. ”This combination will bring together two businesses where HP has established global leadership,” HP CEO Meg Whitman said. “By providing the best in customer-focused innovation and operational efficiency, we believe we will create a winning scenario for customers, partners and shareholders.” HP’s full press release follows below.

HP Announces Organizational Realignment

PALO ALTO, Calif., March 21, 2012

HP today announced an organizational realignment to improve performance and drive profitable growth across the entire HP portfolio.

As part of this realignment, HP’s Imaging and Printing Group (IPG) and its Personal Systems Group (PSG) are joining forces to create the Printing and Personal Systems Group. The combined entity will be led by Todd Bradley, who has served as the executive vice president of PSG since 2005.

Vyomesh Joshi, executive vice president of IPG, is retiring after a highly accomplished 31-year career at HP. Under Joshi’s leadership, IPG has grown revenue from $19 billion to $26 billion, and doubled its operating profit to approximately $4 billion.

“VJ embodies the spirit of HP and his impact on the company has been tremendous,” said Meg Whitman, president and chief executive officer, HP. “Under his leadership, IPG accelerated innovation and pioneered solutions that transformed the printing market. We wish him the very best as he embarks on a new chapter in his life.”

Combining these two entities will rationalize HP’s go-to-market strategy, branding, supply chain and customer support worldwide. This will lead to a better customer experience and drive innovation across personal computing and printing. This realignment is expected to provide opportunities for cost savings and accelerate HP’s ability to pursue profitable growth and reinvest in the business.

“This combination will bring together two businesses where HP has established global leadership,” said Whitman. “By providing the best in customer-focused innovation and operational efficiency, we believe we will create a winning scenario for customers, partners and shareholders.”

In addition to combining PSG and IPG, HP also is taking steps to unify and streamline certain key business functions.

The Global Accounts Sales organization will join the newly named HP Enterprise Group. This group will be led by David Donatelli and includes Enterprise Servers, Storage, Networking and Technology Services.

The new structure is expected to speed decision making, increase productivity and improve efficiency, while providing a simplified customer experience. A new role for Jan Zadak, executive vice president for Global Sales, will be announced at a later date. Zadak will work with Donatelli to ensure an orderly transition.

HP also announced that it will unify its Marketing functions across business units under Marty Homlish, executive vice president and chief marketing officer, HP. This will allow for even more effective brand-building and marketing activities, and will create efficiencies across the business units.

HP’s Communications employees worldwide also will be similarly unified under Henry Gomez, executive vice president and chief communications officer, HP. Together these two moves will create a more powerful voice to demonstrate the power of “One HP.”

Finally, HP is moving the Global Real Estate function from Finance into Global Technology and Business Processes to address real estate consolidation and improve the workplace experience for HP employees.

“Ensuring we have the right organizational structure in place is a critical first step in driving improved execution, and increasing effectiveness and efficiency,” added Whitman. “The result will be a faster, more streamlined, performance-driven HP that is customer focused and poised to capitalize on rapidly shifting industry trends.”

Hewlett-Packard will reportedly soon undergo a reorganization that will see its Personal Systems Group merged with its Imaging and Printing Group. AllThingsD cites multiple unnamed sources in reporting the news, and additional details are light for the time being. Vyomesh Joshi, currently the executive vice president in charge of HP’s imaging and printing business, will leave the company as part of the reorganization. Executive vice president Todd Bradley will reportedly run the merged businesses.

Read

Apple on Wednesday unveiled its new iPad, a sleek slate with a stunning 2,048 x 1,536-pixel Retina Display, a speedy Apple A5X processor and embedded 4G LTE. The Cupertino, California-based company repeatedly tossed around its “post-PC” buzzword — Apple’s post-PC devices accounted for 76% of its revenue in the fourth quarter last year — and there is no question that the new iPad will be a hit. Does it spell the end for PCs, however? Not according to market research firm Gartner. Read on for more.

In 2011, the PC market was flat according to Gartner. Shipments totaled 350 million units last year, just as they did in 2010. Despite increased pressure from Apple’s new iPad and a continued flurry of Android tablets due to hit the market in 2012, Gartner sees the PC market picking up this year, with shipments growing 4.4% to 368 million units. The firm’s projected growth is hardly impressive compared to the 13.8% the PC industry grew in 2010, but it does point to a rebound.

“PC shipments will remain weak in 2012, as the PC market plays catch up in  bringing a new level of innovation that consumers want to see in devices they purchase,” Gartner analyst Ranjit Atwal said in a statement. “The real question is whether Windows 8 and ultrabooks will create the compelling offering that gets the earlier adopter of devices excited about PCs again.”

Atwal does suggest that media tablets like the iPad could begin to have a direct impact on PC sales moving forward, which is a notion many industry watchers had rejected until recently. ”Consumers will now look at a task that they have to perform, and they will determine which device will allow them to perform such a task in the most effective, fun and convenient way,” the analyst said. “The device has to meet the user needs not the other way round.” Gartner’s full press release follows below.

Gartner Says PC Shipments Will Grow 4.4 Percent in 2012

PC Market to Exhibit Higher Growth by End of 2013

STAMFORD, Conn., March 8, 2012— Worldwide PC shipments are on pace to total 368 million units in 2012, a 4.4 percent increase from 2011, according to the latest forecast by Gartner, Inc. PC shipments are forecast to see higher growth by the end of 2013, when shipments are expected to reach more than 400 million units.

“PC shipments will remain weak in 2012, as the PC market plays catch up in  bringing a new level of innovation that consumers want to see in devices they purchase,” saidRanjit Atwal, research director at Gartner. “The real question is whether Windows 8 and ultrabooks will create the compelling offering that gets the earlier adopter of devices excited about PCs again.”

In addition, while the economic environment and supply issues played a key part in the weaker PC market, it was a lesser concern to PC vendors compared to the far greater issue of changing consumer dynamics.

Gartner analysts said that 2011 redefined the landscape of the device market. “The use of applications such as e-mail, social networking and Internet access, that were traditionally the domain of the PC, are now being used across media tablets and smartphones, making these devices in some cases more valued and attractive propositions,” said Mr. Atwal. “Consumers will now look at a task that they have to perform, and they will determine which device will allow them to perform such a task in the most effective, fun and convenient way. The device has to meet the user needs not the other way round.”

Gartner expects ultrabooks will garner greater attention in the latter half of 2012, as the industry looks for this platform to reinvigorate the mobile PC form factor. “However, PCs will face more  competition as we see new media tablets based on operating systems from Android and Microsoft, as well the new iPad,” Mr. Atwal said.

“Moreover, we expect the shift to the personal cloud will also accelerate as consumers increasingly adopt cloud-based services as part of their digital ecosystem,” Mr. Atwal said. “The evolution of the personal cloud will challenge vendors across all mobile devices markets and add to the hurdles for PC vendors to overcome to revive the PCs and differentiate them from tablets. The creation of content capabilities of PCs may not be enough to counteract the better content consumption capabilities of media tablets.”

Mature PC markets will continue to be replacement market driven and their volumes will be much less than their emerging market counterparts.

“Emerging markets are key to driving worldwide PC growth in both the short and long-term, and our expectation is that 2012 and then 2013 onwards will be supported by growth in emerging markets as their share increases from just over 50 percent in 2011 to nearly 70 percent in 2016,” said Mr. Atwal. “Emerging markets have very low PC penetration and even with the availability of other devices we still expect a steady uptake of PCs.”

Additional analysis is available in the Gartner on Demand webinar “Gartner PC and Media Tablet Forecast Update, 1Q 2012.” The webinar is available at http://my.gartner.com/portal/server.pt?open=512&objID=202&mode=2&PageID=5553&resId=1921116&ref=Webinar-Calendar.

Hewlett-Packard will cut 275 of its 500 remaining employees on the webOS team as its mobile platform transitions to open source, WebOS Nation reported on Tuesday. “As webOS continues the transition from making mobile devices to open source software, it no longer needs many of the engineering and other related positions that it required before,” the company said in a statement. “This creates a smaller and more nimble team that is well-equipped to deliver an open source webOS and sustain HP’s commitment to the software over the long term.” While positions are being cut, HP hopes to redeploy employees to other areas of the company. The move leaves the webOS team with roughly 225 workers.

Read

Hewlett-Packard CEO Meg Whitman on Thursday said that the company has a bright future ahead, although it will take some time to rebuild after a year of disappointment, reports The Wall Street Journal. Within two to three years, Whitman expects the company to best be known for cloud computing, security and tools that help businesses better manage their data. Whitman also announced that the Palo Alto-based manufacturer plans to release a tablet later this year that will run Microsoft’s upcoming Windows 8 operating system. The company’s previous tablet, the HP TouchPad, ran webOS and was canceled two months after its lackluster launch. As for how the company intends to position its upcoming tablet, Whitman believes the best way for HP to gain tablet market share is to focus on the enterprise market.

Read

Apple’s shipments of iPads and MacBooks in the fourth quarter combined to give the Cupertino-based company a 26.6% percent share of the mobile PC market, according to a report from DisplaySearch released on Thursday. Apple shipped a total of 23.4 million units, nearly three times the amount of No.2 HP. The iPad accounted for 18.7 million units and captured 59.1% of the tablet market. Amazon shipped 5.3 million Kindle Fire’s for 16.7% of the market, with Samsung shipping 2.1 million and controlling 6.7% of the market. ASUS shipped 1.5 million units for a 4.6% market share and Barnes & Noble shipped 1.1 million units for a 3.5% share. Apple’s fourth quarter notebook shipments came in at 4.6 million units for an 8.3% share of the market. Ranking ahead of the Cupertino-based company was HP (15%), Dell (11.8%), Acer (11.8%) and Lenovo (10.8%). Read on for DisplaySearch’s press release.

Apple Maintains Top Mobile PC Share Position for Q4’11 and Full Year

HP, Dell, Acer and Lenovo Round Out Top Five Spots; Apple Y/Y Shipment Growth Tops 125% for the Quarter and the Year

Santa Clara, Calif., February 23, 2012—Apple shipped nearly 23.4 million mobile PCs in Q4’11, up 128% Y/Y, and over 62.8 million mobile PCs in 2011, up 132% Y/Y, according to preliminary results from the latest NPD DisplaySearch Quarterly Mobile PC Shipment and Forecast Report. Nearly 80% of Apple’s mobile PC shipments were iPads, more than 18.7 million shipped in the quarter, up 156% Y/Y, and 48.4 million units for the year, up 183% Y/Y.

Overall mobile PC shipments grew 12% Q/Q and 44% Y/Y, reaching 88 million units in Q4’11. This was driven by continuing strong demand for tablets. Tablet PC shipment growth was 42% Q/Q and 210% Y/Y, reaching 31.7 million units in Q4’11. Notebook PC shipments were flat Q/Q but up nearly 11% Y/Y, reaching 56.3 million units. As expected, consumer mobile PC adoption was focused on tablets, holding up demand in notebooks.

“Mobile PC brands read the writing on the wall in the fourth quarter,” said Richard Shim, NPD DisplaySearch Senior Analyst. “Consumer demand for notebooks was expected to be weak following modest back-to-school results, especially with the expected launch of Windows 8 on the horizon, and increasing interest in tablet PCs. As a result, brands focused their typical holiday price cuts on tablets to boost demand.”

Apple’s 26.6% share in Q4’11 is largely due to its dominant position in tablet PCs, which propelled it to nearly three times the shipments of HP. The other brands in the top five market share rankings relied almost exclusively on notebook PC shipments to establish their positions.

Table 1: Preliminary Q4’11 Worldwide Top Five Mobile PC Shipment Rankings by Brand

Rank	Brand	Units (millions)	Share (%)
1	Apple	23.4	26.6
2	HP	8.7	9.9
3	Dell	6.9	7.9
4	Acer Group	6.8	7.7
5	Lenovo	6.3	7.2

Source: Q1’12 DisplaySearch Quarterly Mobile PC Shipment and Forecast Report

HP maintained the top notebook PC ranking with a 15.5% share, although it lost some of its lead as shipments into North America, China, Latin America, and Asia Pacific faltered. Dell and Acer essentially tied for second place with 11.8% each. Dell had strong results in EMEA, while Acer continued to struggle in the notebook PC market. Lenovo continues to build on momentum started early this year with strong growth in China and Asia Pacific with a dip in North America, and maintained its #4 position in notebook PCs, gaining some share in Q4’11. Apple leapfrogged over ASUS and Toshiba to capture #5 with 8.3% market share.

Table 2: Preliminary Q4’11 Worldwide Top Five Notebook PC Shipment Rankings by Brand

Rank	Brand	Units (millions)	Share (%)
1	HP	8.7	15.5
2	Dell	6.7	11.8
3	Acer Group	6.6	11.8
4	Lenovo	6.1	10.8
5	Apple	4.6	8.3

Source: Q1’12 DisplaySearch Quarterly Mobile PC Shipment and Forecast Report

In the tablet PC market, Apple continued its strong growth across all its regions, capturing 59.1% share in Q4’11. Newcomers Amazon and Barnes and Noble firmly planted their flags in the market, at #2 and #5, respectively—Amazon with 16.7% share and Barnes and Noble with 3.5%. Both brands focused on North America in their market entries. Samsung improved in all its key markets, particularly EMEA, helping it to reach .67% market share. ASUS continued its strong results in North America, EMEA, and Asia Pacific as it took 4.6% share in Q4’11.

Table 3: Preliminary Q4’11 Worldwide Top Five Tablet PC Shipment Rankings by Brand

Rank	Brand	Units (millions)	Share (%)
1	Apple*	18.7	59.1
2	Amazon	5.3	16.7
3	Samsung	2.1	6.7
4	ASUS	1.5	4.6
5	Barnes and Noble	1.1	3.5

Source: Q1’12 DisplaySearch Quarterly Mobile PC Shipment and Forecast Report
* Apple shipments include units for sell through and inventory.

Hewlett-Packard on Wednesday reported its fiscal first-quarter earnings, which fell short of Wall Street’s expectations. Analysts expected the computer giant to pull in $30.75 billion and $0.87 per share, and while HP’s first-quarter earnings of $0.92 per share beat the Street’s consensus, revenue dipped 7% to $30 billion and missed estimates. “In the first quarter, we delivered on our Q1 outlook and remained focused on the fundamentals to drive long-term sustainable returns,” said HP president and CEO Meg Whitman. “We are taking the necessary steps to improve execution, increase effectiveness and capitalize on emerging opportunities to reassert HP’s technology leadership.” HP anticipates its second-quarter EPS to fall between $0.88 and $0.91, below Wall Street’s consensus of $0.95 per share. Read on for HP’s press release.

HP Reports First Quarter 2012 Results

PALO ALTO, CA–(Marketwire – Feb 22, 2012) – HP (NYSE: HPQ)
First quarter non-GAAP diluted earnings per share of $0.92, down 32% from the prior-year period and above previously provided outlook of $0.83 to $0.86 per share

First quarter GAAP diluted earnings per share of $0.73, down 38% from the prior-year period and above previously provided outlook of $0.61 to $0.64 per share

First quarter net revenue of $30.0 billion, down 7% from the prior-year period

Returned $1.0 billion in cash to shareholders in the form of dividends and share repurchases
HP (NYSE: HPQ) today announced financial results for its first fiscal quarter ended January 31, 2012. For the quarter, net revenue of $30.0 billion was down 7% from the prior-year period, and down 8% when adjusted for the effects of currency.

GAAP diluted earnings per share (EPS) was $0.73, down 38% from the prior-year period. Non-GAAP diluted EPS was $0.92, down 32% from the prior-year period. First quarter non-GAAP earnings information excludes after-tax costs of $364 million, or $0.19 per diluted share, related to amortization of purchased intangible assets, restructuring charges and acquisition-related charges.

“In the first quarter, we delivered on our Q1 outlook and remained focused on the fundamentals to drive long-term sustainable returns,” said Meg Whitman, HP president and chief executive officer. “We are taking the necessary steps to improve execution, increase effectiveness and capitalize on emerging opportunities to reassert HP’s technology leadership.”

Earnings highlights

Q1 FY12 Q1 FY11 Y/Y
GAAP net revenue ($B) $30.0 $32.3 (7%)
GAAP operating margin 6.8% 10.5% (3.7 pts)
GAAP net earnings ($B) $1.5 $2.6 (44%)
GAAP diluted EPS $0.73 $1.17 (38%)
Non-GAAP operating margin 8.6% 12.4% (3.8 pts)
Non-GAAP net earnings ($B) $1.8 $3.0 (40%)
Non-GAAP diluted EPS $0.92 $1.36 (32%)
Information about HP’s use of non-GAAP financial information is provided under “Use of non-GAAP financial information” below.

Trends and regional performance

In the Americas, first quarter revenue was $13.2 billion, down 9% year over year and down 8% when adjusted for the effects of currency. Europe, the Middle East and Africa revenue of $11.7 billion was down 4% year over year and down 5% when adjusted for the effects of currency. Revenue in Asia Pacific was $5.2 billion, representing a 10% decrease year over year and down 12% when adjusted for the effects of currency.
Revenue from outside of the United States in the first quarter accounted for 66% of total HP revenue. BRIC countries (Brazil, Russia, India and China) generated revenue of $3.1 billion, down 13% from the year-ago period, and representing 10% of total HP revenue.

Revenue in HP’s commercial businesses declined 4% year over year. Revenue in HP’s consumer businesses, within PSG and IPG, was collectively down 23% year over year.
Business group results

Personal Systems Group (PSG) revenue declined 15% year over year with a 5.2% operating margin. Commercial client revenue declined 7%, Consumer client revenue declined 25% and Workstations revenue was flat. Total units were down 18%, with a 19% decline in desktop units and an 18% decline in notebook units.

Services revenue of $8.6 billion grew 1% year over year with a 10.5% operating margin. Technology Services revenue grew 2%, Application and Business Services revenue was flat and IT Outsourcing revenue grew 2% year over year.

Imaging and Printing Group (IPG) revenue declined 7% year over year with a 12.2% operating margin. Commercial hardware revenue was down 5% year over year with commercial printer units down 10%. Consumer hardware revenue was down 15% year over year with a 15% decline in printer units.

Enterprise Servers, Storage and Networking (ESSN) revenue declined 10% year over year with an 11.2% operating margin. Networking revenue was flat, Industry Standard Servers revenue was down 11%, Business Critical Systems revenue was down 27% and Storage revenue was down 6% year over year.

Software revenue grew 30% year over year with a 17.1% operating margin, including the results of Autonomy. Software revenue was driven by 12% license growth, 22% support growth and 108% growth in services.

HP Financial Services revenue grew 15% year over year driven by an 8% increase in net portfolio assets and flat financing volume. The business delivered a 9.6% operating margin.
Asset management

HP generated $1.2 billion in cash flow from operations in the first quarter. Inventory ended the quarter at $7.3 billion, with days of inventory up 3 days year over year to 28 days. Accounts receivable of $15.9 billion was up 2 days year over year to 48 days. Accounts payable ended the quarter at $12.4 billion, down 2 days from the prior-year period at 48 days. HP’s dividend payment of $0.12 per share in the first quarter resulted in cash usage of $244 million. HP also utilized $780 million of cash during the quarter to repurchase approximately 29 million shares of common stock in the open market. HP exited the quarter with $8.2 billion in gross cash.
Outlook

For the second quarter of fiscal 2012, HP estimates non-GAAP diluted EPS to be in the range of $0.88 to $0.91 and GAAP diluted EPS to be in the range of $0.68 to $0.71.
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.

There is no change to HP’s previously provided full year fiscal 2012 outlook of non-GAAP diluted EPS of at least $4.00 and GAAP diluted EPS of approximately $3.20.
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.

As part of its annual financial review process, HP implemented several organizational realignments effective Q1 FY12. To provide improved visibility and comparability, HP has reflected these realignments in prior financial reporting periods on an as-if basis. These realignments resulted in, among other things, the transfer of revenue within and among various financial reporting segments and business units. The changes do not impact HP’s previously reported consolidated net revenue, earnings from operations, net earnings or earnings per share at the company level. To reflect these changes, HP released modified quarterly and annual consolidated condensed statements of earnings, segment financial results and statements of business unit revenue for fiscal 2010 and 2011, which are available on HP’s Investor Relations website at www.hp.com/investor/home.

While speaking at HP’s global partner summit in Las Vegas on Wednesday, Hewlett-Packard CEO Meg Whitman discussed her company’s strategy moving forward, further emphasizing the potential of the now open-source webOS platform. Whitman is already on record saying that webOS offers big benefits compared to iOS (which is closed) and Android (which is fragmented), and now the chief executive is pushing things a step further. ”I think there is room for another operating system,” Whitman said at the summit according to Channel EMEA. “IOS is great but it is a closed system. I think that Android may end up as a closed system because of [Google’s] relationship with Motorola.” Google’s $12.5 billion acquisition of Motorola Mobility was approved by U.S. and European regulators earlier this week, and Whitman suggests the union may end up having a huge impact on Android’s future. Google has said that its Motorola buy won’t affect other Android partners adversely but as the company works to develop a new generation of own-brand hardware, the future of the platform as it stands today is anything but certain.

Read

Consumer technology hardware sales in the United States fell 0.5% percent in 2011, ending the year just shy of $144 billion according to market research firm The NPD Group. Roughly 60% of all sales were from PCs, TVs, tablets, eReaders, mobile phones and video game hardware, NPD said. Computers generated the most revenue with nearly $28 billion or roughly 20% of sales, with tablets and eReaders doubling sales to $15 billion in 2011. For the second year in a row, Apple led all consumer electronics brands and was the only one to increase sales during the holiday quarter, posting a 36% year-over-year increase. The Cupertino-based company accounted for 19% percent of all sales, almost double second-ranked Hewlett-Packard. Best Buy was the top retailer for the second year in a row, followed by Walmart and Apple respectively, with Staples and Amazon tied for fourth place. Online, direct mail and TV shopping channel sales increased 7% and accounted for 24% of all sales, up from 22% in 2010. Read on for NPD’s press release.

Apple tops 2011 as the #1 Brand and Best Buy is the #1 Retailer

PORT WASHINGTON, NEW YORK, FEBRUARY 13, 2012 – U.S. consumer technology hardware and consumable sales* fell just one half of a percent in 2011 ending the year at nearly $144 billion, according to leading market research company The NPD Group.

Nearly 60 percent of all sales in 2011 were driven by the top five categories; PCs, TVs, tablets/e-readers, mobile phones, and video game hardware, according to NPD’s Retail and Consumer tracking services and Mobile Phone Track. PCs (notebooks and desktops) generated the most revenue with nearly $28 billion in sales, accounting for almost 20 percent of sales, but that figure was a decline of 3 percent from 2010. Tablets/e-readers were the clear winner in 2011, nearly doubling sales to $15 billion in 2011.

“U.S. hardware sales growth is becoming harder and harder to achieve at the broad industry level,” said Stephen Baker, vice president of industry analysis at NPD. “Sales outside of the top five categories fell by 8 percent in 2011 as consumers shifted spending from older technologies to a narrow range of products.”

Apple benefited from this shift as it was the leading consumer electronics brand for the second year in a row. Among the top five brands Apple was the only one to experience a sales increase, posting a 36 percent rise over 2010. By the critical fourth quarter Apple accounted for 19 percent of all sales dollars, almost twice as much as number two Hewlett-Packard.

Top 5 U.S. Brands Based on 2011 Revenue

Brand Sales Growth/Decline
Apple 36%
Hewlett-Packard -3%
Samsung -6%
Sony -21%
Dell -17%
Source: The NPD Group/Consumer Tracking Service, Retail Tracking Service, and Mobile Phone Track

At the retailer level, Best Buy came out on top once again, followed by Walmart and Apple. Staples and Amazon tied for fourth place to round out the top five, a repeat of 2010.

Sales through online, direct mail, and TV shopping channels jumped 7 percent and accounted for 24 percent of all sales, up from 22 percent in 2010. Sales through these non-retail channels captured 25 percent of industry revenue in the fourth quarter of 2011.

“While in-store sales fell about 2.5 percent in 2011, the growth in online volumes for retailers meant that retail name plates still accounted for well over four of every five dollars spent on CE hardware in the US,” said Baker. “Despite their sales strength, retail stores still face serious challenges in 2012 as volumes in the traditional CE categories, which once carried these stores, continue to slide. It shouldn’t be forgotten, however, that a large majority of mobile phones and tablets/e-readers (the two fastest growing CE categories) have mostly been driven through in-store experiences.”

When the HP TouchPad was released in the summer of 2011 it did little to impress consumers, leading to the tablet being discontinued after a mere 49 days on the market. Remaining TouchPad stock received substantial price reductions, dropping to as low as $99 dollars during a huge fire sale. Shortly after inventory ran dry, crafty hackers had announced their intention to run the Android operating system in replace of WebOS on the TouchPad, and progress thus far has been slow, with alpha versions being released that are fairly stable but have serious bugs. In an act of good will, HP has now released an Android kernel source code to the hacking community. Read on for more.

The source code appears to have been developed separately from webOS, and was last changed in March 2011, three months before the TouchPad’s release, RootzWiki reports. The code will not help with any major fixes, however, and will instead help with minor bugs. “Kernel source from HP would have been more helpful earlier in development. Don’t expect huge gains from this source,” said Erik Hardesty, a member of the CyanogenMod team, on Twitter. “It will help with things like serial console and Bluetooth. Most other areas it *might* with will be minor.”

Read [RootzWiki] Read [Twitter]