E Ink, the popular company that provides paper-look gray-scale displays for eReaders, reported consolidated revenues of $48.02 million in January, down 63.6% from the same month last year and 11% sequentially. The growing popularity of media tablets with full-color displays likely played a big role in the decline — sales of Amazon’s Kindle Fire and Barnes & Noble’s Nook Tablet are thought to be eating into the companies’ respective dedicated eReader businesses to an extent. Even though E Ink’s revenue took a nose dive in January, the company said that it expects to post revenues of $1.35 billion this year, up 5% from 2011.

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Amazon on Tuesday reported its earnings for the fourth quarter, during which it took in $17.4 billion in revenue. While its net sales were up 35% from the $12.95 billion reported during the fourth quarter last year, the company missed analyst estimates of $18.26 billion in revenue for the quarter. Amazon’s net income decreased 58% to $177 million during the quarter, or $0.38 per diluted share, compared with the net income of $416 million it reported during the same quarter last year. Net sales for the year jumped 41% to $48.08 billion, up from the $34.20 billion the company reported in 2010. Amazon said its Kindle Fire tablet has been the #1 best-selling, most wished-for and most gifted product on its website for the past 17 weeks. In addition, the company said the nine-week holiday period ended December 31st, 2011 resulted in a 177% increase in Kindle unit sales, which includes the Kindle Fire. Amazon expects net sales to fall between $12 billion and $13.4 billion during the first quarter of this year, up between 22% and 36% from the first quarter last year. Amazon’s full press release follows after the break. 

Amazon.com Announces Fourth Quarter Sales up 35% to $17.43 Billion; Kindle Device Sales Nearly Triple During the Holidays

SEATTLE–(BUSINESS WIRE)–Jan. 31, 2012– Amazon.com, Inc. (NASDAQ:AMZN) today announced financial results for its fourth quarter endedDecember 31, 2011.
Operating cash flow increased 12% to $3.90 billion for the trailing twelve months, compared with $3.50 billion for the trailing twelve months endedDecember 31, 2010. Free cash flow decreased 17% to $2.09 billion for the trailing twelve months, compared with $2.52 billion for the trailing twelve months ended December 31, 2010.

Common shares outstanding plus shares underlying stock-based awards totaled 468 million on December 31, 2011, compared with 465 million a year ago.

Net sales increased 35% to $17.43 billion in the fourth quarter, compared with $12.95 billion in fourth quarter 2010. Excluding the $101 millionfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales would have grown 34% compared with fourth quarter 2010.

Operating income was $260 million in the fourth quarter, compared with $474 million in fourth quarter 2010. The favorable impact from year-over-year changes in foreign exchange rates throughout the quarter on operating income was $5 million.

Net income decreased 58% to $177 million in the fourth quarter, or $0.38 per diluted share, compared with net income of $416 million, or $0.91 per diluted share, in fourth quarter 2010.

“We are grateful to the millions of customers who purchased the Kindle Fire and Kindle e-reader devices this holiday season, making Kindle our bestselling product across both the U.S. and Europe,” said Jeff Bezos, founder and CEO of Amazon.com. “Our millions of third-party sellers had a tremendous holiday season with 65% unit growth and now represent 36% of total units sold.”

Full Year 2011
Net sales increased 41% to $48.08 billion, compared with $34.20 billion in 2010. Excluding the $1.09 billion favorable impact from year-over-year changes in foreign exchange rates throughout the year, net sales would have grown 37% compared with 2010.
Operating income decreased 39% to $862 million, compared with $1.41 billion in 2010. The favorable impact from year-over-year changes in foreign exchange rates throughout the year on operating income was $53 million.

Net income decreased 45% to $631 million in 2011, or $1.37 per diluted share, compared with net income of $1.15 billion, or $2.53 per diluted share, in 2010.
Highlights
• During the nine-week holiday period ending December 31, 2011, Kindle unit sales, including both the Kindle Fire and e-reader devices, increased 177% over the same period last year.

• Kindle Fire is the #1 bestselling, most gifted, and most wished for product across the millions of items available on Amazon.com since its introduction 17 weeks ago.

• Amazon launched Kindle Stores at Amazon.it and Amazon.es. Kindle moved to the top of the bestseller list on launch day in both countries and held the top spot this holiday season. The new Kindle was also the bestselling product on Amazon.co.uk, Amazon.de and Amazon.fr.
• Amazon.com announced the Kindle Owners’ Lending Library, a benefit of Prime membership that offers over 80,000 books to borrow for free – including over 100 current and former New York Times bestsellers – as frequently as a book a month, with no due dates.
• Kindle Direct Publishing (KDP) announced KDP Select, an annual fund of at least $6 million dedicated to independent authors and publishers who participate in the Kindle Owners’ Lending Library. In December alone, customers borrowed 295,000 KDP Select titles, and KDP Select has helped grow the total library selection of books by over 16X.
• Amazon continued to expand its catalog of title offerings for Prime Instant Video, announcing licensing agreements with Twentieth Century Fox Television Distribution, which added the popular FOX and FX television shows Glee and Sons of Anarchy, and Disney-ABC Television, which added popular television shows including Lost and Grey’s Anatomy. These deals bring the total number of Prime Instant Videos to more than 13,000 movies and TV shows from partners such as CBS, Fox, NBCUniversal, Sony, Warner Bros., PBS, ABC-Disney and many more.
• The number of videos purchased or rented from Amazon Instant Video and the number of Amazon Instant Video customers both more than doubled year-over-year in the fourth quarter. In addition, the number of Prime Instant Video streams increased nearly 300% in the fourth quarter compared to the third quarter.
• Amazon Appstore for Android customers nearly tripled in the fourth quarter compared to the third quarter. In addition, customers downloaded more apps from the Amazon Appstore during the fourth quarter than they had during all previous quarters combined.

• North America segment sales, representing the Company’s U.S. and Canadian sites, were $9.90 billion, up 37% from fourth quarter 2010.
• International segment sales, representing the Company’s U.K., German, Japanese, French, Chinese, Italian and Spanish sites, were $7.53 billion, up 31% from fourth quarter 2010. Excluding the favorable impact from year-over-year changes in foreign exchange rates throughout the quarter, sales grew 29%.
• Worldwide Media sales grew 15% to $6.01 billion. Excluding the favorable impact from year-over-year changes in foreign exchange rates throughout the quarter, sales grew 14%.
• Worldwide Electronics and Other General Merchandise sales grew 48% to $10.91 billion. Excluding the favorable impact from year-over-year changes in foreign exchange rates throughout the quarter, sales grew 47%.
• Amazon Web Services (AWS) announced the launch of its new South America (Sao Paulo) Region and U.S. West (Oregon) Region, bringing the total to eight geographic regions worldwide to which the company has deployed its global cloud computing services.
• AWS announced the launch of Amazon DynamoDB, a fully managed NoSQL database service that provides extremely fast and predictable performance with seamless scalability. With a few clicks in the AWS Management Console, customers can launch a new Amazon DynamoDB database table, scale up or down their request capacity for the table without downtime or performance degradation, and gain visibility into resource utilization and performance metrics.
• AWS announced that customers can now run their Microsoft Windows Server applications within the AWS Free Usage Tier – a program designed to help new AWS customers get started in the cloud. Developers and businesses with Windows Server applications can take advantage of 750 hours of Amazon Elastic Compute Cloud (Amazon EC2) Micro Instance usage per month, at no charge for a one-year period.

Financial Guidance
The following forward-looking statements reflect Amazon.com’s expectations as of January 31, 2012. Our results are inherently unpredictable and may be materially affected by many factors, such as fluctuations in foreign exchange rates, changes in global economic conditions and consumer spending, world events, the rate of growth of the Internet and online commerce and the various factors detailed below.
First Quarter 2012 Guidance

• Net sales are expected to be between $12.0 billion and $13.4 billion, or to grow between 22% and 36% compared with first quarter 2011.
• Operating income (loss) is expected to be between $(200) million and $100 million, or between 162% decline and 69% decline compared with first quarter 2011.
• This guidance includes approximately $200 million for stock-based compensation and amortization of intangible assets, and it assumes, among other things, that no additional business acquisitions or investments are concluded and that there are no further revisions to stock-based compensation estimates.
A conference call will be webcast live today at 2 p.m. PT/5 p.m. ET, and will be available for at least three months at www.amazon.com/ir. This call will contain forward-looking statements and other material information regarding the Company’s financial and operating results.
These forward-looking statements are inherently difficult to predict. Actual results could differ materially for a variety of reasons, including, in addition to the factors discussed above, the amount that Amazon.com invests in new business opportunities and the timing of those investments, the mix of products sold to customers, the mix of net sales derived from products as compared with services, the extent to which we owe income taxes, competition, management of growth, potential fluctuations in operating results, international growth and expansion, the outcomes of legal proceedings and claims, fulfillment center optimization, risks of inventory management, seasonality, the degree to which the Company enters into, maintains and develops commercial agreements, acquisitions and strategic transactions, and risks of fulfillment throughput and productivity. Other risks and uncertainties include, among others, risks related to new products, services and technologies, system interruptions, government regulation and taxation, payments and fraud. In addition, the current global economic climate amplifies many of these risks. More information about factors that potentially could affect Amazon.com’s financial results is included in Amazon.com’s filings with the Securities and Exchange Commission (“SEC”), including its most recent Annual Report on Form 10-K and subsequent filings.

Our investor relations website is www.amazon.com/ir and we encourage investors to use it as a way of easily finding information about us. We promptly make available on this website, free of charge, the reports that we file or furnish with the SEC, corporate governance information (including our Code of Business Conduct and Ethics), and select press releases and social media postings.

Best-Ever Mobile Broadband Sales and Strong Cash Flows Highlight AT&T’s Fourth-Quarter Results; Stock Buyback Begins on Previous 300 Million Share Authorization

2012 Outlook: Solid Revenue, Margins and Earnings Growth with Strong Free Cash Flow

Dallas, Texas, January 26, 2012

• $(1.12) diluted EPS in fourth quarter compared to $0.18 diluted EPS in the year-ago period. Excluding significant items for both quarters, EPS of $0.42 compared to $0.55 in the year-ago quarter, driven by the company’s best-ever quarter for smartphone activations — up nearly 60 percent year over year
• Consolidated revenues of $32.5 billion, up $1.1 billion, or 3.6 percent, versus the year-earlier period
• In 2011, AT&T’s growth engines — wireless, wireline data and managed services — represented 76 percent of total revenues and grew 7.5 percent versus 2010, led in the fourth quarter by:
  • 10.0 percent growth in wireless revenues
  • 19.4 percent growth in wireless data revenues, up $956 million versus the year-earlier quarter
  • 16.4 percent growth in strategic business services revenues
  • 43.7 percent growth in consumer U-verse revenues
• 9.4 million smartphone sales, best-ever quarter and 50 percent more than previous quarterly record and nearly double 3Q11 sales; 82 percent of postpaid sales were smartphones
• 717,000 wireless postpaid net adds, the largest increase in five quarters; 2.5 million increase in total net wireless subscribers, with gains in every customer category
• Best-ever quarter for Android and Apple smartphones, including 7.6 million iPhone activations
• 571,000 branded computing device (tablets, aircards, etc.) sales, best-ever quarter to reach 5.1 million total subscribers; up almost 70 percent from a year ago
• 12th consecutive quarter with a year-over-year increase in postpaid wireless subscriber ARPU (average monthly revenues per subscriber), up 1.4 percent to $63.76 — more than $6 higher than nearest competitor’s ARPU
• Second consecutive quarter of sequential growth in wireline business revenues
• Sixth consecutive quarter of year-over-year growth in wireline consumer revenues, driven by AT&T U-verse^® services
• 208,000 net gain in AT&T U-verse TV subscribers to reach 3.8 million in service, with continued high broadband and voice attach rates

AT&T Inc. (NYSE:T) today reported fourth-quarter results highlighted by record sales, strong wireless network performance and improved wireline revenue trends.

“We had a tremendous year in terms of execution, and we have excellent momentum across our growth platforms,” said Randall Stephenson, AT&T chairman and chief executive officer.”This was a blowout quarter for sales. Our network performance is at a high level on voice quality and best-in-class mobile download speeds. Sales continue to be strong and business revenue trends are on a good track.

“Looking ahead, we start 2012 with the best visibility we’ve had in some time, and we’re well positioned to deliver solid results — including continued revenue growth with margin expansion, solid earnings per share growth and strong cash flow,” Stephenson said.”In short order, we will begin share repurchases to deliver significant value to our owners.”

Fourth-Quarter Financial Results
For the quarter ended December 31, 2011, AT&T’s consolidated revenues totaled $32.5 billion, up $1.1 billion, or 3.6 percent, versus the year-earlier quarter.

Compared with the fourth quarter of 2010, operating expenses were $41.5 billion versus $29.3 billion; operating loss was $9.0 billion, compared to operating income of $2.1 billion; and AT&T’s operating income margin was (27.7) percent, compared to 6.7 percent. Excluding fourth-quarter significant items, operating expenses were $28.1 billion versus $25.8 billion; operating income was $4.4 billion, compared to $5.6 billion; and operating income margin was 13.5 percent, compared to 17.7 percent.

Fourth-quarter 2011 net income attributable to AT&T totaled $(6.7) billion, or $(1.12) per diluted share. Excluding significant non-cash charges of $0.65 from the actuarial loss on benefit plans and $0.48 for directory asset impairments, along with a one-time charge of $0.44 for termination of the T-Mobile USA acquisition and a one-time gain of $0.03 from a tax settlement, adjusted earnings per share was $0.42.

(The actuarial loss on benefit plans was driven by a reduction in the discount rate from 5.8 percent to 5.3 percent. While our investment returns were better than the overall market, they were less than expectations; this was largely offset by better-than-expected force and medical cost management. The directory asset impairment resulted from an annual review of intangible assets compared to fair value.)

These results compare with reported net income attributable to AT&T of $1.1 billion, or $0.18 per diluted share, in the fourth quarter of 2010. Excluding significant items, earnings per share for the fourth quarter of 2010 was $0.55 per diluted share.

Fourth-quarter 2011 cash from operating activities totaled $7.5 billion, and capital expenditures totaled $5.5 billion. Also included in the fourth quarter, the company made a $1.0 billion contribution to the company’s pension fund. No additional funding is required in 2012. Free cash flow — cash from operating activities minus capital expenditures — totaled $2.0 billion.

Full-Year Results
For the full year 2011, compared with 2010 results, AT&T’s consolidated revenues totaled $126.7 billion versus $124.3 billion, up 2.0 percent; operating expenses were $117.5 billion, compared with $104.7 billion; net income attributable to AT&T was $3.9 billion versus $19.9 billion; and earnings per diluted share was $0.66 compared with $3.35. Excluding significant items, earnings per share totaled $2.20, compared with $2.29.

Compared with 2010 results, AT&T’s full-year cash from operating activities totaled $34.6 billion, down from $35.0 billion. Capital expenditures, including capitalized interest, totaled $20.3 billion versus $20.3 billion, including a 6.4 percent increase in wireless-related capital investment versus 2010, as AT&T aggressively deployed next-generation mobile broadband networks. Free cash flow totaled $14.4 billion, compared with $14.7 billion.

Outlook
AT&T is well positioned to deliver solid revenue and earnings growth with improving margins while returning substantial value to shareowners. In 2012, AT&T expects continued consolidated revenue growth, including postpaid wireless ARPU growth around 2 percent for the year. The company also expects to expand consolidated and wireless margins while keeping wireline margins stable. Achieving these targets will lead to mid-single-digit or better earnings growth with an opportunity to accelerate earnings growth beyond 2012. Outlook excludes any significant items. Importantly, little economic lift is assumed with these expectations.

AT&T expects capital expenditures to be about $20 billion, stable with 2011, as increases in wireless spending offset declines in wireline capital expenditures. The company also expects strong free cash flow, with full-year free cash flow in the $15 to $16 billion range, and plans to begin execution of its existing 300 million share repurchase authorization immediately.

WIRELESS OPERATIONAL HIGHLIGHTS
Record-setting mobile broadband sales and the company’s best postpaid subscriber growth in five quarters drove double-digit wireless revenue growth. AT&T continues to lead the industry in smartphone penetration, mobile broadband sales and postpaid ARPU. Highlights included:

Best Postpaid Growth in Five Quarters. AT&T posted a net increase in total wireless subscribers of 2.5 million in the fourth quarter to reach 103.2 million in service. This included gains in every customer category. Subscriber additions for the quarter include postpaid net adds of 717,000, the best gain in five quarters. Prepaid net adds were 159,000, connected device net adds were 1,029,000 and reseller net adds were 592,000. Fourth-quarter net adds reflect accelerated adoption of smartphones, including the October launch of iPhone 4S, increases in prepaid and reseller subscribers and sales of tablets and connected devices such as automobile monitoring systems, security systems and a host of other emerging products.

Record Quarter for Smartphone Sales. AT&T delivered its best-ever smartphone sales quarter — up nearly 60 percent from the year-ago period. (Smartphones are devices with voice and data capabilities and an advanced operating system to better manage data and Internet access.) In the fourth quarter, the company set a new record with 9.4 million smartphones sold, nearly double the number sold in the third quarter and 50 percent more than the previous quarterly record. Fourth-quarter smartphone sales represented more than 80 percent of postpaid device sales. Both iPhone and Android device sales set records. During the quarter, more than 7.6 million iPhones were activated, the majority of which were iPhone 4S, which went on sale Oct. 14, and more than twice as many Android smartphones were sold versus the fourth quarter a year ago. iPhone sales were helped by a superior customer experience, with AT&T delivering download speeds up to three-times faster than on other U.S. carriers’ networks.

At the end of the quarter, 56.8 percent of AT&T’s 69.3 million postpaid subscribers had smartphones, up from 42.7 percent a year earlier and 32.8 percent two years ago. The average ARPU for smartphones on AT&T’s network is 1.9 times that of the company’s non-smartphone devices. About 87 percent of smartphone subscribers are on FamilyTalk^® or business plans. Churn levels for these subscribers are significantly lower than for other postpaid subscribers.

Best-Ever Quarter for Branded Computing Device Sales. AT&T had its best sales quarter ever for branded computing subscribers, a new growth area for the company that includes tablets, aircards, mobile devices, tethering plans and other data-only devices. AT&T added 571,000 of these devices to reach 5.1 million, an almost 70 percent increase in total subscribers from a year ago. Most of those new subscribers were tablets, with 311,000 added in the quarter, more than half of which were postpaid.

Double-Digit Growth for Wireless Revenues. Total wireless revenues, which include equipment sales, were up 10.0 percent year over year to $16.7 billion. Wireless service revenues increased 4.0 percent, to $14.3 billion, in the fourth quarter.

Wireless Data Revenues Increase 19.4 Percent. Wireless data revenues — driven by Internet access, access to applications, messaging and related services — increased by $956 million, or 19.4 percent, from the year-earlier quarter to $5.9 billion. AT&T’s postpaid wireless subscribers on monthly data plans increased by 16.4 percent over the past year. The number of subscribers on tiered data plans also continues to increase. About 22 million, or 56 percent, of all smartphone subscribers are on tiered data plans, and about 70 percent have chosen the higher-tier plans.

Industry-Leading Postpaid ARPU Continues Growth. Driven by strong data growth, postpaid subscriber ARPU increased 1.4 percent versus the year-earlier quarter to $63.76. This marked the 12th consecutive quarter AT&T has posted a year-over-year increase in postpaid ARPU. AT&T continues to lead the industry with postpaid subscriber ARPU about $6 higher than the nearest competitor. Postpaid data ARPU reached $26.01, up 14.9 percent versus the year-earlier quarter.

Postpaid Churn Up Only Slightly. Despite record smartphone sales and the first holiday sales period since the loss of AT&T’s iPhone exclusivity, postpaid churn was up only slightly at 1.21 percent, compared to 1.15 percent in both the year-ago fourth quarter and in the third quarter of 2011. Total churn was up slightly at 1.39 percent versus 1.32 percent in the fourth quarter of 2010 and 1.28 percent in the third quarter of 2011.

Wireless Margins Reflect Record Sales. Fourth-quarter wireless margins reflect record-setting smartphone sales and customer upgrade levels. This was offset in part by improved operating efficiencies and further revenue gains from the company’s growing base of high-quality smartphone subscribers.

AT&T’s fourth-quarter wireless operating income margin was 15.2 percent versus 22.9 percent in the year-earlier quarter, and AT&T’s wireless EBITDA service margin was 28.7 percent, compared with 37.6 percent in the fourth quarter of 2010. (EBITDA service margin is earnings before interest, taxes, depreciation and amortization, divided by total service revenues.) Fourth-quarter wireless operating expenses totaled $14.2 billion, up 20.9 percent versus the year-earlier quarter, and wireless operating income was $2.5 billion, down 27.0 percent year over year.

WIRELINE OPERATIONAL HIGHLIGHTS
AT&T’s fourth-quarter wireline results were highlighted by the second consecutive quarter of sequential wireline business revenue growth, a 44 percent increase in U-verse revenues and solid cost management:

Sequential Wireline Business Revenue Growth Continues. Total business revenues grew sequentially for the second consecutive quarter. Revenues were $9.3 billion, down 1.4 percent versus the year-earlier quarter but a slight increase over the third quarter of 2011. The year-over-year decline reflects economic conditions and weakness in voice and legacy data products somewhat offset by growth in IP data. Business service revenues, which exclude CPE, declined 1.2 percent year over year, compared to a year-over-year decline of 4.3 percent in the year-ago quarter and were essentially flat sequentially, despite fewer business days in the fourth quarter.

Robust Strategic Business Services Revenues. Revenues from the new-generation capabilities that lead AT&T’s most advanced business solutions — including Ethernet, VPNs, hosting, IP conferencing and — grew 16.4 percent versus the year-earlier quarter, continuing strong trends in this area. This now represents a nearly $6 billion annualized revenue stream.

VPN Growth Drives Business IP Revenues. Total business IP data revenues grew 9.2 percent versus the year-earlier fourth quarter, led by growth in VPN revenues. IP-based solutions allow customers to easily add managed services such as network security, cloud services and IP conferencing on top of their infrastructures. Total business data revenues grew 1.3 percent year over year.

Wireline Consumer Revenues Continue Growth. Driven by strength in IP data services, revenues from residential customers totaled $5.3 billion, an increase of 0.5 percent versus the fourth quarter a year ago. The fourth quarter marked the sixth consecutive quarter of year-over-year growth.

208,000 U-verse Net Adds. AT&T U-verse TV added 208,000 subscribers to reach 3.8 million in service. As U-verse scales, its margins improve, contributing to profitability. In the fourth quarter, the AT&T U-verse High Speed Internet attach rate was 90 percent and about half of new subscribers took AT&T U-verse Voice. About three-fourths of AT&T U-verse TV subscribers have a triple- or quad-play option from AT&T. ARPU for U-verse triple-play customers was almost $170, up 2.5 percent year over year.

AT&T’s U-verse deployment has reached its goal of passing 30 million living units. Companywide penetration of eligible living units continues to grow and was at 15.9 percent in the fourth quarter, and 25.0 percent across areas marketed to for 36 months or more. AT&T’s total video subscribers, which combine the company’s U-verse and bundled satellite customers, reached 5.6 million at the end of the quarter, representing 23.9 percent of households served.

U-verse Broadband Continues Strong Growth. AT&T U-verse High Speed Internet delivered a fourth-quarter net gain of 587,000 subscribers to reach a total of 5.2 million, helping offset losses from DSL. Overall, AT&T lost 49,000 wireline broadband connections. About 74 percent of consumers have a broadband plan delivering speeds of 3 Mbps or higher versus 65 percent in the year-ago quarter.

U-verse Drives Consumer Revenue Transformation. U-verse continues to drive a transformation in wireline consumer, reflected by the fact that consumer IP revenues now represent 53.2 percent of wireline consumer revenues, up from 45.0 percent in the year-earlier quarter. Increased AT&T U-verse penetration and a significant number of subscribers on triple- or quad-play options drove 18.7 percent year-over-year growth in IP revenues from residential customers (broadband, U-verse TV and U-verse Voice) and 4.3 percent sequential growth. U-verse revenues grew 43.7 percent compared with the year-ago fourth quarter and were up 8.6 percent versus the third quarter of 2011.

Growth in Revenues Per Household Continues. Wireline revenues per household served increased 7.0 percent versus the year-earlier fourth quarter and were up 2.3 percent sequentially (average revenues per household is total wireline consumer revenues divided by the average monthly households in service), driven by AT&T U-verse services. This marked AT&T’s 16th consecutive quarter with year-over-year growth in wireline consumer revenues per household as U-verse scales and represents a larger portion of this category.

Consumer Connection Trends. In the fourth quarter, AT&T posted a decline in total consumer revenue connections primarily due to expected declines in traditional voice access lines, consistent with broader industry trends and somewhat offset by increases in U-verse TV and VoIP (Voice over Internet Protocol) connections. AT&T U-verse Voice connections increased by 136,000 in the quarter and 598,000 over the past four quarters. Total consumer revenue connections at the end of the fourth quarter were 41.3 million, compared with 43.4 million at the end of the fourth quarter of 2010 and 41.9 million at the end of the third quarter of 2011.

Wireline Revenues Down Slightly. Total fourth-quarter wireline revenues were $14.9 billion, down 1.4 percent versus the year-earlier quarter and down slightly sequentially. Fourth-quarter wireline operating expenses were $13.1 billion, down 0.2 percent versus the fourth quarter of 2010 and down 0.1 percent sequentially. Wireline operating income totaled $1.8 billion, down from $2.0 billion in the fourth quarter of 2010 and down versus the third quarter of 2011. AT&T’s fourth-quarter wireline operating income margin was 11.9 percent, compared to 13.0 percent in the year-earlier quarter and down slightly from 12.1 percent in the third quarter of 2011. Improved consumer and business IP data revenue trends and execution of cost initiatives helped to partially offset declines in voice revenues.

 

Netflix on Wednesday announced its earnings for the fourth quarter of 2011. The company noted $876 million in revenue, up 47% from the same quarter last year, and earnings per share of $0.73. Analysts had pegged the company to report revenue in the ballpark of $857.4 million and EPS of $0.54, Barron’s relayed. Netflix also said it added 220,000 new subscribers, a far cry from the 800,000 it lost during the third quarter, and now serves 21.67 million streaming customers in the United States. The company has 24.4 million U.S. customers signed up for DVD subscriptions and that figure jumped by 610,000 during the quarter.

Netflix serves 1.9 million international streaming customers and added 380,000 new subs during the quarter. “We are encouraged by the strength in acquisition that we are seeing, coupled with continued improvements in retention among our domestic streaming members,” the company said in a statement. “For Q1 to date, our domestic net additions for streaming are tracking close to our net additions in Q1 2010 of 1.7 million net additions. Given this trend, we are comfortable with our ability to continue to expand our domestic streaming contribution margin.”

Verizon on Tuesday reported its fourth quarter 2011 results. The company noted record revenue growth during the quarter, which it said was fueled by strong demand for wireless service. Revenue for the year totaled $110.9 billion, up 4% from 2010. Its quarterly revenue of $28.4 billion was up 7.7% from the same time period last year. Verizon Wireless, a joint venture between Verizon Communications and Vodafone, reported the highest number of retail net additions in three years driven by smartphone sales. Revenues tipped at $18.3 billion during the quarter, up 13% from the same period last year. Data revenues was up even higher year over year, at $6.3 billion, up 19.2% ($1 billion) from the same period one year prior. ARPU grew 2.6% to $53.14. Verizon also reported $0.85 EPS, down from $0.90 EPS in 2010. The carrier added a total of 1 million total net connections during the fourth quarter and 1.5 million retail customers, including 1.2 million retail postpaid customers. Postpaid churn was 0.94% for the quarter. Verizon’s full press release follows after the break.

Verizon Reports Record Revenue Growth in 4Q, Fueled by Strong Demand for Wireless, FiOS and Strategic Services

Verizon Generates Strong Cash Flows, 18.2 Percent Shareholder Returns in 2011; 4Q Earnings Impacted by Non-Cash Pension Items

 4Q 2011 HIGHLIGHTS

Consolidated

·         7.7 percent year-over-year quarterly revenue growth in 4Q, a company record.

·         A loss of 71 cents in diluted earnings per share (EPS), impacted by non-cash pension items, compared with earnings of 93 cents per share in 4Q 2010.

·         52 cents per share in adjusted EPS (non-GAAP), which excludes $1.23 per share in non-operational items, compared with 54 cents in adjusted EPS in 4Q 2010.

 

Wireless

·         $18.3 billion in total 4Q revenues, up 13.0 percent year over year; data revenues of $6.3 billion, up 19.2 percent, representing 41.6 percent of service revenues; $15.1 billion in service revenues, up 6.4 percent.

·         1.5 million retail net additions (excluding acquisitions and adjustments), largest increase in three years, includes 1.2 million retail postpaid net customer additions; 108.7 million total connections, includes 92.2 million retail customers.

·         2.6 percent growth in retail service ARPU over 4Q 2010; retail postpaid data ARPU up 14.3 percent.

·         23.7 percent operating income margin; 42.2 percent Segment EBITDA margin on service revenues (non-GAAP).

 

Wireline

·         201,000 FiOS Internet and 194,000 FiOS Video net additions, with increased sales penetration for both products; net increase of 98,000 broadband connections from 3Q 2011.

·         8.5 percent year-over-year increase in consumer ARPU; FiOS ARPU was more than $148 per month.

·         14.7 percent increase in strategic services revenues, representing 51 percent of global enterprise revenues.

·         3.0 percent operating income margin; 23.8 percent Segment EBITDA margin (non-GAAP), compared with 23.5 percent in 4Q 2010 and 21.4 percent in 3Q 2011.

 

NEW YORK – Verizon Communications Inc. (NYSE, Nasdaq: VZ) posted the highest year-over-year quarterly revenue growth in the company’s 11-year history in fourth-quarter 2011, fueled by continued strong demand for Verizon Wireless services and handsets, FiOS fiber-optic services, and strategic business products and services.

 

‘Great Momentum for 2012’

 

“Verizon finished 2011 very strong, both in terms of revenue growth and by delivering an 18.2 percent total return to our shareholders for the full year, and the company has great momentum for 2012,” said Lowell McAdam, Verizon chairman, president and chief executive officer.  “Verizon Wireless produced particularly strong growth in the fourth quarter.  While that diluted wireless margins in the short term, it is good news for revenue and margin growth over the long term, particularly given our leadership in the rapidly developing 4G LTE ecosystem.”

 

McAdam added: “Wireline margins recovered from third-quarter pressures, and we expect wireline margin expansion in 2012.  With recent strategic moves and our investments in FiOS, LTE, and global IP and cloud-based strategic services, Verizon has set the stage for accelerated growth across our business units, and we look to continue to build significant value for shareholders in 2012.”

 

Verizon’s total shareholder return is a combination of stock-price appreciation and dividend payments.  Regarding recent strategic moves, Verizon last month strengthened its ability to provide fully integrated solutions by creating Verizon Enterprise Solutions, a sales and marketing organization, to harness all of Verizon’s solutions for business and government customers globally.  In addition, Verizon Wireless announced agreements to purchase AWS (Advanced Wireless Spectrum) licenses, an important step toward meeting customers’ needs for wireless data and broadband services.

 

4Q and Full-Year Earnings Results

 

Due primarily to the impact of previously announced non-cash pension items, Verizon reported a loss of 71 cents in EPS in fourth-quarter 2011, compared with earnings of 93 cents per share in fourth-quarter 2010.

 

Adjusted fourth-quarter 2011 earnings (non-GAAP) of 52 cents per share exclude $1.20 per share, or $3.4 billion after-tax, due to the actuarial valuation of Verizon’s benefit plans, and 3 cents per share for the early extinguishment of debt.  This annual valuation adjustment, resulting from changes in actuarial assumptions, is in accordance with a Verizon accounting policy adopted last year.  Comparable adjusted fourth-quarter 2010 earnings were 54 cents per share, excluding the impact of non-operational items, the largest of which was a gain from benefit-plan valuation of 44 cents per share.

 

On an annual basis, Verizon reported 85 cents in 2011 EPS, compared with 90 cents per share in 2010.  Adjusted annual EPS (non-GAAP) was $2.15 in 2011, compared with $2.08 on a comparable basis (non-GAAP, excluding results from divested businesses) in 2010.

 

Consolidated Revenue Growth, Strong Cash Flows

 

In fourth-quarter 2011, Verizon’s total operating revenues were $28.4 billion on a consolidated basis, an increase of 7.7 percent compared with fourth-quarter 2010.  For full-year 2011, revenues totaled $110.9 billion, a 4.0 percent increase compared with 2010, when results included revenues from operations that have since been divested.  On a comparable basis (non-GAAP), Verizon’s 2011 full-year revenues increased 6.2 percent compared with 2010.

 

Consolidated EBITDA (earnings before interest, taxes, depreciation and amortization) totaled $29.4 billion in 2011.  On an adjusted basis (non-GAAP), EBITDA increased by more than $950 million in 2011 compared with 2010.

 

Cash flow from operating activities totaled $29.8 billion in 2011, and capital expenditures totaled $16.2 billion.  Free cash flow (non-GAAP, cash flow from operations less capex) was more than $13.5 billion in 2011.  From this total, Verizon returned $5.6 billion in quarterly dividends to shareholders in 2011, as the company’s Board of Directors approved a fifth consecutive year of dividend increases.

 

Verizon Wireless Delivers Strong Customer and Revenue Growth

 

In fourth-quarter 2011, Verizon Wireless delivered the highest number of retail net additions in three years and strong growth in revenues, driven by increased smartphone penetration and increased retail postpaid ARPU (average monthly service revenue per user).

 

Wireless Financial Highlights

·         Total revenues were $18.3 billion in fourth-quarter 2011, up 13.0 percent year over year.  Data revenues were $6.3 billion, up more than $1.0 billion or 19.2 percent year over year, and represented 41.6 percent of all service revenues.  Service revenues were $15.1 billion, up 6.4 percent year over year.  For full-year 2011, total revenues were $70.2 billion, up 10.6 percent over full-year 2010, and service revenues were $59.2 billion in 2011, up 6.3 percent year over year.

·         Retail service ARPU grew 2.6 percent over fourth-quarter 2010, to $53.14.  Retail postpaid ARPU grew 2.5 percent, to $54.80.  Retail postpaid data ARPU increased to $22.76, up 14.3 percent year over year.

·         In fourth-quarter 2011, wireless operating income margin was 23.7 percent, and wireless generated $6.4 billion of EBITDA.  Segment EBITDA margin on service revenues (non-GAAP) was 42.2 percent, down 530 basis points from fourth-quarter 2010.  For full-year 2011, operating income margin was 26.4 percent, down 310 basis points from full-year 2010; Segment EBITDA margin was 44.8 percent, down 210 basis points.

 

Wireless Operational Highlights

·         Verizon Wireless added 1.0 million total net connections in fourth-quarter 2011.  The company added 1.5 million retail customers, including 1.2 million retail postpaid customers.  While the wholesale channel grew during the fourth quarter, a loss of telematics customers resulted in a net decrease of 490,000 wholesale and other connections in the quarter.  These totals exclude acquisitions and adjustments.

·         At year-end 2011, the company had 108.7 million total connections, a 6.3 percent increase year over year, consisting of 92.2 million retail connections and 16.5 million wholesale and other connections.

·         At year-end 2011, smartphones accounted for 44 percent of the Verizon Wireless retail postpaid customer phone base, up from 39 percent at the end of third-quarter 2011.

·         Retail postpaid churn was 0.94 percent in fourth-quarter 2011, an improvement of 7 basis points year over year.  Total retail churn was 1.23 percent, an improvement of 14 basis points year over year.

·         Verizon Wireless continued to roll out its 4G LTE mobile broadband network, the largest 4G LTE network in the U.S.  As of Monday (Jan. 23), Verizon Wireless 4G LTE service was available to more than 200 million people in 195 markets across the U.S.

·         Verizon Wireless introduced six new 4G LTE devices in fourth-quarter 2011: the Droid Razr by Motorola; the Samsung Stratosphere; the HTC Rezound; the Galaxy Nexus by Samsung; and Droid Xyboard tablets in 10.1-inch and 8-inch form factors.  Earlier this month, the company announced that six additional 4G LTE devices would be available in the coming weeks, including two mobile hotspots, now called Jetpacks, from ZTE and Novatel; three smartphones – the Droid 4 and Droid Razr Maxx from Motorola, and the Spectrum from LG, which launched last week; and the Samsung Galaxy Tab 7.7.

·         In December, Verizon Wireless announced agreements to purchase AWS licenses from SpectrumCo – a joint venture of Comcast, Time Warner and Bright House Networks – and from Cox TMI Wireless.  The spectrum licenses under the two agreements cover 93 percent of the U.S. population, and the purchases are subject to regulatory approval.

·         Verizon Wireless’ 4G LTE network was ranked No. 1 on PC World’s 100 Best Products of 2011 list.  In October, RootMetrics ranked Verizon Wireless tops for network performance in Boston and 21 other cities nationwide; in November, Verizon Wireless won the RootMetrics RootScore award for data performance in 36 markets.

 

FiOS, Strategic Services Contribute to Revenue Growth

 

In fourth-quarter 2011, revenues and customers continued to increase for FiOS services, and sales of strategic services to business customers remained strong.  Segment EBITDA margins (non-GAAP) also increased both sequentially and year over year.

 

Wireline Financial Highlights

·         Fourth-quarter 2011 operating revenues were $10.1 billion, a decline of 1.5 percent compared with fourth-quarter 2010.  Consumer revenues grew 1.3 percent compared with fourth-quarter 2010.

·         In fourth-quarter 2011, wireline operating income was $300 million, up 18.6 percent from fourth-quarter 2010.  Segment EBITDA (non-GAAP) was $2.4 billion in fourth-quarter 2011, flat compared with fourth-quarter 2010 and an increase of $243 million from third-quarter 2011, when the Segment EBITDA was impacted by storm-related repair costs and a two-week strike.  Operating income margin was 3.0 percent in fourth-quarter 2011.  Segment EBITDA margin (non-GAAP) was 23.8 percent, compared with 23.5 percent in fourth-quarter 2010 and 21.4 percent in third-quarter 2011.

·         Consumer ARPU for wireline services was $96.43 in fourth-quarter 2011, up 8.5 percent compared with fourth-quarter 2010.  ARPU for FiOS customers totaled more than $148 in fourth-quarter 2011, rising approximately $2 year over year.  FiOS services to consumer retail customers represented 61 percent of consumer wireline revenues in fourth-quarter 2011.

·         Global enterprise revenues totaled $3.9 billion in the quarter, up 1.3 percent compared with fourth-quarter 2010.  Sales of strategic services – including Terremark cloud services, security and IT solutions, and strategic networking – increased 14.7 percent compared with fourth-quarter 2010 and represented 51 percent of global enterprise revenues in fourth-quarter 2011.

 

Wireline Operational Highlights

·         Verizon added 201,000 net new FiOS Internet connections and 194,000 net new FiOS Video connections in fourth-quarter 2011.  Verizon had a total of 4.8 million FiOS Internet and 4.2 million FiOS Video connections at year-end.

·         FiOS penetration (subscribers as a percentage of potential subscribers) continued to increase.  FiOS Internet penetration was 35.5 percent at year-end 2011, compared with 31.9 percent at year-end 2010.  In the same periods, FiOS Video penetration was 31.5 percent, compared with 28.0 percent, respectively.  The FiOS network passed 16.5 million premises at year-end 2011, up more than 900,000 from year-end 2010.

·         Broadband connections totaled 8.7 million at year-end 2011, a 3.3 percent year-over-year increase.  FiOS Internet connections more than offset a decrease in DSL-based HSI connections, resulting in a net increase of 98,000 broadband connections from third-quarter 2011.  Total voice connections, which measures FiOS Digital Voice connections in addition to traditional switched access lines, declined 7.2 percent to 24.1 million – the smallest year-over-year decline since first-quarter 2006.

·         Verizon continued to enhance its global portfolio of secure IT and advanced communications platforms and industry-focused solutions.  In fourth-quarter 2011, this included an expansion of the company’s Voice-over-IP service within the Asia-Pacific region and the rollout of an automated healthcare fraud-detection platform for private health insurers and government agencies.

·         Multinational corporations, leading businesses and government agencies – including Accenture plc; Chrysler Group LLC; the Commonwealth of Pennsylvania; GXS Inc.; MagnaCare Holdings Inc.; Tyson Foods Inc.; Consolidated Edison Company of New York Inc.; and Orange and Rockland Utilities Inc., a Con Edison subsidiary – completed new agreements or expanded their relationships with Verizon for a range of advanced communications and information technology solutions.  Verizon also announced that it had been named a prime contractor under the U.S. General Services Administration’s CONNECTIONS II contract to provide professional and managed services and custom networking solutions at federal facilities.

·         Verizon continued to broaden the scope and capabilities of its network infrastructure.  In fourth-quarter 2011, the company completed deployment of its next-generation 100 gigabit-per-second network route between New York City and Chicago and kicked off seven additional routes in the U.S.; expanded the Ethernet footprint to an additional 80 nodes supporting 23 areas in the Eastern part of the U.S.; expanded the global Private IP network into six additional countries in Africa and two more countries in the Middle East; and activated the first phase of the Europe India Gateway (EIG) submarine cable connecting Europe to the Middle East and Africa with 40G high-speed connections.

Yahoo has frozen its hiring process and may even consider layoffs according to a new report. The news was revealed by AllThingsD on Thursday, which wrote that the choices were made ahead of expected weak fourth quarter earnings. Yahoo isn’t considering mass layoffs, however; instead, AllThingsD said they are likely to be “small and selective” if they happen at all. Yahoo experienced a bit of turmoil earlier this week when co-founder, former CEO and board member Jerry Yang resigned from the company. AllThingsD said other board members may be considering leaving the company, too. Yahoo will report its fourth quarter earnings next Tuesday.

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MetroPCS on Thursday announced its fourth quarter 2011 subscriber results. The carrier added 197,000 net subscribers, which missed analyst expectations that the carrier would add between 214,000 and 250,000 net customer additions, Reuters said. The company stated that it ended the year with more than 9.3 million total subscribers and said it added about 1.2 million subscribers during the 2011 calendar year. Churn took a turn for the worse since the fourth quarter of 2010, however; the company reported 3.7% churn in the fourth quarter, up from 3.5% during the same period in 2010. That figure is an improvement over the 4.5% churn the carrier reported during the third quarter of 2011, however. MetroPCS’s full press release follows after the break. 

MetroPCS Releases Fourth Quarter 2011 Subscriber Results

Fourth Quarter 2011 Subscriber Highlights Include:
Consolidated net subscriber additions of 197 thousand and approximately 1.2 million for the fourth quarter 2011 and full year 2011, respectively

Quarterly churn of 3.7%, a sequential decrease of 80bps from the third quarter of 2011, and an increase of 20bps from the fourth quarter of 2010

Serve over 9.3 million subscribers, an increase of approximately 1.2 million subscribers or 15%, from the fourth quarter of 2010

DALLAS–(BUSINESS WIRE)–Jan. 5, 2012– MetroPCS Communications, Inc. (NYSE: PCS), the nation’s leading provider of no annual contract, unlimited, flat-rate wireless communications service, today announced selected subscriber information for the quarter and year ended December 31, 2011.

In the fourth quarter of 2011, MetroPCS reported gross additions of approximately 1.22 million subscribers, which represents a 7% increase over the fourth quarter of 2010. The Company ended the fourth quarter of 2011 with over 9.3 million subscribers, which includes net additions during the quarter of 197 thousand subscribers. MetroPCS added approximately 1.2 million subscribers during the twelve months ended December 31, 2011. Churn for the fourth quarter of 2011 was 3.7% compared to 3.5% in the fourth quarter of 2010 and down from 4.5% in the third quarter of 2011. The decrease in churn from the third quarter of 2011 was primarily driven by normal seasonal effects related to traditional retail selling periods, as well as improved network performance resulting from the investment in our CDMA network to meet increased data demands.

“We reported solid subscriber growth in the fourth quarter, adding 197 thousand net subscriber additions, marking the sixth consecutive year in which we have added over 1 million net subscriber additions. We were also pleased with our fourth quarter churn of 3.7% representing a significant sequential decrease,” said Roger D. Linquist, Chairman and Chief Executive Officer of MetroPCS.

Subscriber Metrics
Three Months Ended     Three Months Ended     Twelve Months Ended     Twelve Months Ended
December 31, 2011 December 31, 2010 December 31, 2011 December 31, 2010

Consolidated Subscribers
End of Period 9,346,659 8,155,110 9,346,659 8,155,110

Net Additions 197,410 297,726 1,191,549 1,515,586

Churn 3.7 % 3.5 % 3.8 % 3.6 %

The subscriber results for the fourth quarter of 2011 and the twelve months ended December 31, 2011 may not be reflective of subscriber results for any subsequent period.

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Fueled by the launch of Apple’s iPhone 4S, Verizon Wireless sold more than 4.2 million iPhones in the fourth quarter last year — more than double the number of iPhones it sold in the third quarter. Verizon’s chief financial officer Fran Shammo revealed the carrier’s iPhone sales for the December quarter during a talk at a Citigroup conference in San Francisco on Wednesday. Verizon Wireless’s largest competitor, AT&T, is expected to have a record quarter as well for iPhone sales. While AT&T has not yet revealed any figures for the fourth quarter, we estimate that the company sold more than 5.5 million iPhones during its holiday quarter. The nation’s No.2 carrier announced last month that it expected record smartphone sales for the quarter, and it had already sold 6 million units between October and November alone. AT&T’s previous single-quarter sales record was 6.1 million smartphones.

Netflix announced on Wednesday that its streaming subscribers around the world watched more than 2 billion hours of video during the fourth quarter of 2011. The company also said it served more than 20 million streaming subscribers during the quarter. “We were thrilled to deliver more than two billion hours of TV shows and movies across 45 countries in the fourth quarter,” said Netflix Co-Founder and CEO Reed Hastings. “Netflix delights members by giving them choice, convenience and control over the entertainment they love for an incredibly low price.” The company lost 800,000 customers during the third quarter when it upset customers by raising its prices and then confused them with a short-lived attempt at a DVD rental spinoff business called Qwikster. Netflix is set to debut its original series “Lilyhammer” on February 6th and fresh content, such as Drive, Hugo, Captain America and Margin Call, will be available to customers in the coming months. The full Netflix announcement follows after the break.

Netflix Members Enjoy More Than Two Billion Hours of Movies and TV Shows in Fourth Quarter

With More U.S. Members Watching Instantly, and Aided by Global Expansion, Netflix Streaming Hours Grew Dramatically in 2011
Jan 4, 2012

LOS GATOS, Calif., Jan. 4, 2012 /PRNewswire/ – Netflix Inc. (Nasdaq: NFLX) said today its members instantly watched more than two billion hours of TV shows and movies streaming from Netflix in the fourth quarter of 2011.

With more than 20 million streaming members globally, Netflix has revolutionized entertainment by allowing people to enjoy TV shows and movies when, where and how they want with a click of a remote, mouse or the touch of a screen.

“We were thrilled to deliver more than two billion hours of TV shows and movies across 45 countries in the fourth quarter,” said Netflix Co-Founder and CEO Reed Hastings. “Netflix delights members by giving them choice, convenience and control over the entertainment they love for an incredibly low price.”

Throughout 2011, Netflix continued to add to its already expansive variety of TV shows and movies in the United States, signing new multi-year agreements with CBS, Twentieth Century Fox, Lionsgate, Miramax, Open Road Films, NBCUniversal, Dreamworks Animation, MGM and the Disney-ABC Television Group among others, and announcing the creation of the highly-anticipated Netflix original series “House of Cards,” a gripping political thriller from Executive Producer David Fincher and starring two-time Academy Award winning actor Kevin Spacey.

Another Netflix original, “Lilyhammer,” starring Steven Van Zandt of “The Sopranos” and Bruce Springsteen’s E Street Band, as a New York gangster in Norway, premieres on Netflix in the U.S., Canada and Latin America on February 6.

“In the coming months, Netflix members can enjoy complete seasons of great TV series from all the major networks and most branded cable channels as well as fantastic films like Drive, Hugo, Captain America and Margin Call,” said Netflix Chief Content Officer Ted Sarandos. “The more great TV shows and movies Netflix adds, the more people watch.”

HTC said it will launch a number of new and competitive smartphone models, including a fresh batch of LTE devices in the United States, to help it end its fourth quarter slump. The company recently revised its outlook for the fourth quarter and said revenue would be flat, a move that came as a surprise to investors used to a company that had previously seen six consecutive months of record revenue leading up to October. HTC was the first company to launch an Android smartphone in the United States, the first to launch a WiMAX smartphone on Sprint and the first to sell a 4G LTE device on Verizon Wireless. “We will focus on the product next year, better and more competitive,” HTC’s chief financial officer Winston Yung told Reuters, noting that the situation isn’t that serious. “Other than new LTE phones for the U.S. market, we also have phones for the global market. We will launch some worldwide flagship products. We’re confident in them. We have six quarters of improvement, the most conservative guidance is 45 million units of shipments this year, a lot higher than 25 million last year.”

Citigroup blamed the weak fourth quarter sales on “inferior products” that weren’t able to keep up with Samsung’s Galaxy S II and Apple’s iPhone family. Additionally, investors aren’t so sure that HTC can maintain the innovation that has made its past phones so attractive. “More foreign investors are still selling HTC as the company doesn’t have many bets in hand,” Masterlink Investment Advisory vice president Tom Tang told Reuters. ”And unlike last time [the company was in this position], HTC didn’t make a share buyback plan this time.”

HTC’s ongoing lawsuits will not help the situation, either. The company recently said that it will not appeal a 2009 ruling that gave IPCom the winning hand in a patent lawsuit. The decision could result in a German injunction against sales of HTC’s smartphones, which could hurt sales during the holiday season.

BGR recently reported exclusive details surrounding two upcoming HTC smartphones — the HTC Ville and HTC Edge — both of which are expected to be unveiled at Mobile World Congress in Barcelona, Spain in February.

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HP reported its fiscal fourth-quarter and full-year earnings on Monday, noting net revenue of $32.3 billion for the quarter, down 3% year-over-year. HP’s diluted earnings per share of $1.17 in the fourth quarter was also down 12% year-over-year. Fiscal 2011 GAAP net revenue was $127.2 billion, up 1% from the $126 billion HP reported in 2010. Despite beating analyst expectations of $32.05 billion in net revenue and earnings of $1.13 per share, the company said it is cautious as it looks into 2012. Read on for more.

“We need to get back to the business fundamentals in fiscal 2012, including making prudent investments in the business and driving more consistent execution,” CEO Meg Whitman said in a statement. Chief financial officer and HP executive vice president Cathie Lesjak added, ”We’re remaining cautious heading into FY12 but are focused on delivering our earnings outlook and driving shareholder value.”

HP’s services group reported revenue of $9.3 billion, up 2% year-over-year. Its Enterprise Servers, Storage and Networking group reported a 4% decline in revenue. The software group reported a 28% increase in revenue year-over-year driven by growth in both its licenses and services divisions. HP’s personal systems group (PSG) reported a 2% decline in revenue compared to last year, the financial services sector grew 18% year-over-year and HP’s imaging and printing group reported a 10% drop off. The full press release from HP follows below.

HP Reports Fourth Quarter and Full Year 2011 Results

PALO ALTO, CA, Nov 21, 2011

– Fiscal 2011 non-GAAP net revenue of $127.4 billion, non-GAAP diluted earnings per share of $4.88 and free cash flow of $9.1 billion grew 1%, 7% and 8%, respectively, over the prior year
– Fiscal 2011 GAAP net revenue of $127.2 billion, GAAP diluted earnings per share of $3.32 and cash flow from operations of $12.6 billion
– Fourth quarter non-GAAP net revenue of $32.3 billion, non-GAAP diluted earnings per share of $1.17 and free cash flow of $1.2 billion were down 3%, 12% and 43%, respectively, from the prior-year quarter
– Fourth quarter GAAP net revenue of $32.1 billion, GAAP diluted earnings per share of $0.12 and cash flow from operations of $2.4 billion

HP today announced financial results for its fourth quarter and full fiscal year ended Oct. 31, 2011.

“HP has a great opportunity to build on our strong hardware, software, and services franchises with leading market positions, customer relationships, and intellectual property,” said Meg Whitman, HP president and chief executive officer. “We need to get back to the business fundamentals in fiscal 2012, including making prudent investments in the business and driving more consistent execution.”

“While FY11 proved to be a challenging year, we grew non-GAAP EPS 7% and generated $12.6 billion in cash flow from operations,” said Cathie Lesjak, HP executive vice president and chief financial officer. “We’re remaining cautious heading into FY12 but are focused on delivering our earnings outlook and driving shareholder value.”

Earnings highlights

------------------ ------------------------------ --------------------------
                    Q4 FY11   Q4 FY10      Y/Y      FY11    FY10      Y/Y
------------------ ------------------------------ --------------------------
GAAP net revenue
 ($B)              $   32.1  $   33.3        (3%) $127.2  $126.0         1%
------------------ ------------------------------ --------------------------
GAAP operating
 margin                 2.5%      9.9% (7.4 pts)     7.6%    9.1% (1.5 pts)
------------------ ------------------------------ --------------------------
GAAP net earnings
 ($B)              $    0.2  $    2.5       (91%) $  7.1  $  8.8       (19%)
------------------ ------------------------------ --------------------------
GAAP diluted EPS   $   0.12  $   1.10       (89%) $ 3.32  $ 3.69       (10%)
------------------ ------------------------------ --------------------------
Non-GAAP net
 revenue ($)       $   32.3  $   33.3        (3%) $127.4  $126.0         1%
------------------ ------------------------------ --------------------------
Non-GAAP operating
 margin                 9.7%     12.0% (2.3 pts)    10.8%   11.4% (0.6 pts)
------------------ ------------------------------ --------------------------
Non-GAAP net
 earnings ($B)     $    2.4  $    3.1       (23%) $ 10.4  $ 10.9        (4%)
------------------ ------------------------------ --------------------------
Non-GAAP diluted
 EPS               $   1.17  $   1.33       (12%) $ 4.88  $ 4.58         7%
------------------ ------------------------------ --------------------------

Information about HP’s use of non-GAAP financial information is provided under “Use of non-GAAP financial information” below. Unless otherwise specified, all revenue amounts below are calculated on a GAAP basis.

Full year fiscal 2011 GAAP net revenue for the full fiscal year 2011 was $127.2 billion, up 1% compared with the prior year or down 1% when adjusted for the effects of currency. GAAP operating profit was $9.7 billion, and GAAP diluted earnings per share (EPS) was $3.32, down 10% from the prior year.

Non-GAAP net revenue for the full fiscal year 2011 was $127.4 billion, up 1% compared with the prior year or down 1% when adjusted for the effects of currency. Non-GAAP operating profit was $13.8 billion, and non-GAAP diluted EPS was $4.88, up 7% from the prior year.

Fiscal 2011 non-GAAP net revenue includes an additional $0.2 billion of revenue resulting from the exclusion of contra revenue associated with sales incentive programs implemented in the fourth quarter in connection with the wind down of HP’s webOS device business, net of fourth quarter webOS device revenue. Non-GAAP earnings and operating profit information excludes after-tax costs of $3.3 billion, or $1.56 per diluted share, related to the wind down of HP’s webOS device business, impairment of goodwill and purchased intangible assets, amortization of purchased intangible assets, restructuring charges and acquisition-related charges.

Fourth fiscal quarter 2011 For the quarter, GAAP net revenue of $32.1 billion was down 3% from the prior-year period. Non-GAAP net revenue of $32.3 billion was down 3% from the prior-year period as reported and down 6% when adjusted for the effects of currency.

GAAP diluted EPS was $0.12, down 89% from the prior-year period. Non-GAAP diluted EPS was $1.17, down 12% from the prior-year period.

Fourth quarter non-GAAP net revenue includes an additional $0.2 billion of revenue resulting from the exclusion of contra revenue associated with sales incentive programs implemented in connection with the wind down of HP’s webOS device business, net of webOS device revenue for the period. Fourth quarter non-GAAP earnings information excludes after-tax costs of $2.1 billion, or $1.05 per diluted share, related to the wind down of HP’s webOS device business, impairment of goodwill and purchased intangible assets, amortization of purchased intangible assets, restructuring charges and acquisition-related charges.

Fourth fiscal quarter 2011 trends and regional performance In the Americas, fourth quarter GAAP net revenue was $14.5 billion, down 4% year over year and down 5% when adjusted for the effects of currency. Non-GAAP net revenue in the Americas was $14.6 billion, down 3% year over year and down 4% when adjusted for the effects of currency.

Europe, the Middle East and Africa GAAP revenue of $11.7 billion was down 6% year over year and down 10% when adjusted for the effects of currency. GAAP revenue in Asia Pacific was $6.0 billion, representing a 3% increase year over year, and down 4% when adjusted for the effects of currency.

GAAP revenue from outside of the United States in the fourth quarter accounted for 65% of total HP revenue. BRIC countries (Brazil, Russia, India and China) generated revenue of $3.8 billion, up 9% over the year-ago period, for 12% of total HP revenue.

Revenue in HP’s commercial businesses declined 2% year over year. Revenue in HP’s consumer businesses, within PSG and IPG, was collectively down 9% year over year.

Fourth fiscal quarter 2011 business group results

– Services revenue of $9.3 billion grew 2% year over year with a 12.8% operating margin. Technology Services and Application Services revenue grew 3% and 2%, respectively, while IT Outsourcing revenue grew 1% and Business Process Outsourcing revenue declined 2%.
– Enterprise Servers, Storage and Networking (ESSN) revenue declined 4% year over year with a 13.0% operating margin. Networking revenue was up 5%, Industry Standard Servers revenue was down 4%, Business Critical Systems revenue was down 23%, and Storage revenue was up 4%.
– HP Software revenue grew 28% year over year with a 27.7% operating margin. HP Software revenue was driven by revenue growth in licenses and services of 33% and 36%, respectively.
– Personal Systems Group (PSG) revenue declined 2% year over year with a 5.7% operating margin. Commercial client revenue grew 5%, and Consumer client revenue declined 9%. Total units were up 2% with 5% growth in desktop units and 1% growth in notebook units.
– Imaging and Printing Group (IPG) revenue declined 10% year over year with a 12.8% operating margin. Commercial revenue was up 4% year over year with commercial printer hardware units up 5%. Consumer printer hardware revenue was down 8% year over year with an 8% decline in units.
– Financial Services revenue grew 18% year over year driven by double-digit growth in both lease volume and portfolio assets. The business delivered a 10.3% operating margin.

Asset management HP generated $2.4 billion in cash flow from operations in the fourth quarter. Inventory ended the quarter at $7.5 billion, with days of inventory up 4 days year over year to 27 days. Accounts receivable of $18.2 billion was up 1 day year over year to 51 days. Accounts payable ended the quarter at $14.8 billion, flat from the prior-year period at 52 days. HP’s dividend payment of $0.12 per share in the fourth quarter resulted in cash usage of $239 million. HP also utilized $500 million of cash during the quarter to repurchase approximately 17 million shares of common stock in the open market. HP exited the quarter with $8.1 billion in gross cash.

Outlook For the first quarter of fiscal 2012, HP estimates non-GAAP diluted EPS in the range of $0.83 to $0.86, and GAAP diluted EPS in the range of $0.61 to $0.64.

First quarter fiscal 2012 non-GAAP diluted EPS estimates exclude after-tax costs of approximately $0.22 per share, related primarily to the amortization and impairment of purchased intangibles, restructuring charges and acquisition-related charges.

HP expects full year fiscal 2012 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 and impairment of purchased intangibles, restructuring charges and acquisition-related charges.

In order to more effectively manage HP as one company and align its guidance policy with its long-term objective of delivering profitable growth, HP will only be providing a quarterly and annual earnings per share outlook. The company believes that earnings per share is a better indicator of successful execution across its various business levers. HP remains committed to high levels of disclosure and transparency, including general commentary on its expectations relating to future revenue and business segment performance, and will continue to provide detailed segment-level financial performance data for completed fiscal periods.

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 Q4 FY11 earnings conference call is accessible via an audio webcast at www.hp.com/investor/2011q4webcast.

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, tax provisions, cash flows, benefit obligations, share repurchases, currency exchange rates, the impact of acquisitions or other financial items; any statements of the plans, strategies and objectives of management for future operations, including the execution of cost reduction programs and restructuring and integration plans; any statements concerning the expected development, performance or market share relating to products or services; any statements regarding current or future macroeconomic trends or events and the impact of those trends and events on HP and its financial performance; any statements regarding pending investigations, claims or disputes; any statements of expectation or belief; and any statements of assumptions underlying any of the foregoing. Risks, uncertainties and assumptions include the impact of macroeconomic and geopolitical trends and events; the competitive pressures faced by HP’s businesses; the development and transition of new products and services and the enhancement of existing products and services to meet customer needs and respond to emerging technological trends; the execution and performance of contracts by HP and its suppliers, customers and partners; the protection of HP’s intellectual property assets, including intellectual property licensed from third parties; integration and other risks associated with business combination and investment transactions; the hiring and retention of key employees; assumptions related to pension and other post-retirement costs; expectations and assumptions relating to the execution and timing of restructuring and integration plans; the possibility that the expected benefits of business combination transactions may not materialize as expected; the resolution of pending investigations, claims and disputes; and other risks that are described in HP’s Annual Report on Form 10-K for the fiscal year ended October 31, 2010 and HP’s other filings with the Securities and Exchange Commission, including HP’s Quarterly Report on Form 10-Q for the fiscal quarter ended July 31, 2011. 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-K for the fiscal year ended October 31, 2011. In particular, determining HP’s actual tax balances and provisions as of October 31, 2011 requires extensive internal and external review of tax data (including consolidating and reviewing the tax provisions of numerous domestic and foreign entities), which is being completed in the ordinary course of preparing HP’s Form 10-K. HP assumes no obligation and does not intend to update these forward-looking statements.

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

                  HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
               CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
                                (Unaudited)
                   (In millions except per share amounts)
                                              Three months ended
                                   ----------------------------------------
                                    October 31,    July 31,     October 31,
                                       2011          2011          2010
                                   ------------  ------------  ------------
Net revenue                        $     32,122  $     31,189  $     33,278
Costs and Expenses:(a)
  Cost of sales                          25,332        23,929        24,995
  Research and development                  829           812           814
  Selling, general and
   administrative                         3,577         3,402         3,464
  Amortization of purchased
   intangible assets                        411           358           424
  Restructuring charges                     179           150           235
  Acquisition-related charges               114            18            51
  Impairment of goodwill and
   purchased intangible assets              885             -             -
                                   ------------  ------------  ------------
    Total costs and expenses             31,327        28,669        29,983
                                   ------------  ------------  ------------
Earnings from operations                    795         2,520         3,295
Interest and other, net                    (401)         (121)          (81)
                                   ------------  ------------  ------------
Earnings before taxes                       394         2,399         3,214
Provision for taxes                         155           473           676
                                   ------------  ------------  ------------
Net earnings                       $        239  $      1,926  $      2,538
                                   ============  ============  ============
Net earnings per share:
  Basic                            $       0.12  $       0.94  $       1.13
  Diluted                          $       0.12  $       0.93  $       1.10

Cash dividends declared per share  $          -  $       0.24  $          -
Weighted-average shares used to
 compute net earnings per share:
  Basic                                   1,989         2,054         2,249
  Diluted                                 2,005         2,080         2,297

(a) In connection with organizational realignments implemented in the first
    quarter of fiscal 2011, 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
                   (In millions except per share amounts)

                                                     Twelve months ended
                                                         October 31,
                                                 --------------------------
                                                     2011          2010
                                                 ------------  ------------
                                                  (Unaudited)
Net revenue                                      $    127,245  $    126,033
Costs and expenses:(a)
  Cost of sales                                        97,529        95,956
  Research and development                              3,254         2,959
  Selling, general and administrative                  13,466        12,718
  Amortization of purchased intangible assets           1,607         1,484
  Restructuring charges                                   645         1,144
  Acquisition-related charges                             182           293
  Impairment of goodwill and purchased
   intangible assets                                      885             -
                                                 ------------  ------------
    Total costs and expenses                          117,568       114,554
                                                 ------------  ------------
Earnings from operations                                9,677        11,479
Interest and other, net                                  (695)         (505)
                                                 ------------  ------------
Earnings before taxes                                   8,982        10,974
Provision for taxes                                     1,908         2,213
                                                 ------------  ------------
Net earnings                                     $      7,074  $      8,761
                                                 ============  ============
Net earnings per share:
  Basic                                          $       3.38  $       3.78
  Diluted                                        $       3.32  $       3.69

Cash dividends declared per share                $       0.40  $       0.32
Weighted-average shares used to compute net
 earnings per share:
  Basic                                                 2,094         2,319
  Diluted                                               2,128         2,372

(a) In connection with organizational realignments implemented in the first
    quarter of fiscal 2011, 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 REVENUE, NET EARNINGS, EARNINGS FROM OPERATIONS,
                  OPERATING MARGIN AND EARNINGS PER SHARE
                                (Unaudited)
                   (In millions except per share amounts)

                  Three               Three               Three
                  months              months              months
                  ended               ended               ended
                 October   Diluted     July    Diluted   October   Diluted
                   31,     earnings    31,     earnings    31,     earnings
                   2011   per share    2011   per share    2010   per share
                 -------  ---------  -------  ---------  -------  ---------
GAAP net revenue $32,122             $31,189             $33,278
Non GAAP
 adjustment:
  WebOS device
   contra
   revenue,
   net(a)            142                   -                   -
                 -------             -------             -------
Non GAAP net
 revenue         $32,264             $31,189             $33,278
                 =======             =======             =======

GAAP net
 earnings        $   239  $    0.12  $ 1,926  $    0.93  $ 2,538  $    1.10
Non-GAAP
 adjustments:
  Amortization
   of purchased
   intangible
   assets            411       0.20      358       0.17      424       0.19
  Restructuring
   charges           179       0.09      150       0.07      235       0.10
  Acquisition-
   related
   charges in
   earnings from
   operations        114       0.06       18       0.01       51       0.02
  Impairment of
   goodwill and
   purchased
   intangible
   assets(b)         885       0.44        -          -        -          -
  Wind down of
   the WebOS
   device
   business(c)       755       0.38        -          -        -          -
  Acquisition-
   related
   charges in
   interest and
   other, net(d)     276       0.14        -          -        -          -
  Adjustments
   for taxes        (509)     (0.26)    (170)     (0.08)    (184)     (0.08)
                 -------  ---------  -------  ---------  -------  ---------
Non-GAAP net
 earnings        $ 2,350  $    1.17  $ 2,282  $    1.10  $ 3,064  $    1.33
                 =======  =========  =======  =========  =======  =========

GAAP earnings
 from operations $   795             $ 2,520             $ 3,295
Non-GAAP
 adjustments:
  Amortization
   of purchased
   intangible
   assets            411                 358                 424
  Restructuring
   charges           179                 150                 235
  Acquisition-
   related
   charges in
   earnings from
   operations        114                  18                  51
  Impairment of
   goodwill and
   purchased
   intangible
   assets(b)         885                   -                   -
  Wind down of
   the WebOS
   device
   business(c)       755                   -                   -
                 -------             -------             -------
Non-GAAP
 earnings from
 operations      $ 3,139             $ 3,046             $ 4,005
                 =======             =======             =======
GAAP operating
 margin                2%                  8%                 10%
Non-GAAP
 adjustments           8%                  2%                  2%
                 -------             -------             -------
Non-GAAP
 operating
 margin               10%                 10%                 12%
                 =======             =======             =======

(a) Includes contra revenue primarily associated with sales incentive
    programs to wind down the webOS device business, net of current quarter
    webOS device revenue.
(b) Includes impairment charges to goodwill and purchased intangible assets
    associated with the acquisition of Palm Inc. on July 1,2010 recorded as
    a result of the decision announced on August 18,2011 to wind down the
    webOS device business.
(c) Includes primarily expenses for supplier-related obligations and contra
    revenue associated with sales incentive programs related to winding down
    the webOS device business.
(d) Includes primarily the cost of the British pound options bought to limit
    foreign exchange rate risk in connection with the Autonomy acquisition.

                  HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
  ADJUSTMENTS TO GAAP NET REVENUE, NET EARNINGS, EARNINGS FROM OPERATIONS,
                  OPERATING MARGIN AND EARNINGS PER SHARE
                                (Unaudited)
                   (In millions except per share amounts)

                            Twelve                    Twelve
                            months                    months
                            ended       Diluted       ended       Diluted
                         October 31,    earnings   October 31,    earnings
                             2011      per share       2010      per share
                         -----------  -----------  -----------  -----------
GAAP net revenue         $   127,245               $   126,033
Non GAAP adjustment:
  WebOS device contra
   revenue, net(a)               142                         -
                         -----------               -----------
Non GAAP net revenue     $   127,387               $   126,033
                         ===========               ===========

GAAP net earnings        $     7,074  $      3.32  $     8,761  $      3.69
Non-GAAP adjustments:
  Amortization of
   purchased intangible
   assets                      1,607         0.75        1,484         0.63
  Restructuring charges          645         0.30        1,144         0.48
  Acquisition-related
   charges in earnings
   from operations               182         0.09          293         0.12
  Impairment of goodwill
   and purchased
   intangible assets(b)          885         0.42            -            -
  Wind down of the WebOS
   device business(c)            755         0.35            -            -
  Acquisition-related
   charges in interest
   and other, net(d)             276         0.13            -            -
  Adjustments for taxes       (1,045)       (0.48)        (816)       (0.34)
                         -----------  -----------  -----------  -----------
Non-GAAP net earnings    $    10,379  $      4.88  $    10,866  $      4.58
                         ===========  ===========  ===========  ===========

GAAP earnings from
 operations              $     9,677               $    11,479
Non-GAAP adjustments:
  Amortization of
   purchased intangible
   assets                      1,607                     1,484
  Restructuring charges          645                     1,144
  Acquisition-related
   charges in earnings
   from operations               182                       293
  Impairment of goodwill
   and purchased
   intangible assets(b)          885                         -
  Wind down of the WebOS
   device business(c)            755                         -
                         -----------               -----------
Non-GAAP earnings from
 operations              $    13,751               $    14,400
                         ===========               ===========
GAAP operating margin              8%                        9%
Non-GAAP adjustments               3%                        2%
                         -----------               -----------
Non-GAAP operating
 margin                           11%                       11%
                         ===========               ===========

(a) Includes contra revenue primarily associated with sales incentive
    programs to wind down the webOS device business, net of current quarter
    webOS device revenue.
(b) Includes impairment charges to goodwill and purchased intangible assets
    associated with the acquisition of Palm Inc. on July 1,2010 recorded as
    a result of the decision announced on August 18,2011 to wind down the
    webOS device business.
(c) Includes primarily expenses for supplier-related obligations and contra
    revenue associated with sales incentive programs related to winding down
    the webOS device business.
(d) Includes primarily the cost of the British pound options bought to limit
    foreign exchange rate risk in connection with the Autonomy acquisition.

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

                                                  October 31,   October 31,
                                                      2011          2010
                                                 ------------- -------------
                                                  (unaudited)
ASSETS
Current assets:
  Cash and cash equivalents                      $       8,043 $      10,929
  Accounts receivable                                   18,224        18,481
  Financing receivables                                  3,162         2,986
  Inventory                                              7,490         6,466
  Other current assets                                  14,102        15,322
                                                 ------------- -------------
    Total current assets                                51,021        54,184
                                                 ------------- -------------
Property, plant and equipment                           12,292        11,763
Long-term financing receivables and other assets        10,755        12,225
Goodwill and purchased intangible assets                55,449        46,331
                                                 ------------- -------------
Total assets                                     $     129,517 $     124,503
                                                 ============= =============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Notes payable and short-term borrowings        $       8,083 $       7,046
  Accounts payable                                      14,750        14,365
  Employee compensation and benefits                     3,999         4,256
  Taxes on earnings                                      1,048           802
  Deferred revenue                                       7,449         6,727
  Other accrued liabilities                             15,113        16,207
                                                 ------------- -------------
    Total current liabilities                           50,442        49,403
                                                 ------------- -------------
Long-term debt                                          22,551        15,258
Other liabilities                                       17,520        19,061
Stockholders' equity:
  HP stockholders' equity                               38,625        40,449
  Non-controlling interests                                379           332
                                                 ------------- -------------
    Total stockholders' equity                          39,004        40,781
                                                 ------------- -------------
Total liabilities and stockholders' equity       $     129,517 $     124,503
                                                 ============= =============

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

                                                Three months  Twelve months
                                                   ended          ended
                                                October 31,    October 31,
                                                    2011           2011
                                               -------------  -------------
Cash flows from operating activities:
  Net earnings                                 $         239  $       7,074
  Adjustments to reconcile net earnings to net
   cash provided by operating activities:
    Depreciation and amortization                      1,262          4,984
    Impairment of goodwill and purchased
     intangible assets                                   885            885
    Stock-based compensation expense                     210            685
    Provision for bad debt and inventory                  90            298
    Restructuring charges                                179            645
    Deferred taxes on earnings                          (638)           166
    Excess tax benefit from stock-based
     compensation                                         (3)          (163)
    Other, net                                           156            (46)
    Changes in assets and liabilities:
      Accounts and financing receivables                  (7)          (227)
      Inventory                                         (113)        (1,252)
      Accounts payable                                   153            275
      Taxes on earnings                                  359            610
      Restructuring                                     (252)        (1,002)
      Other assets and liabilities                      (120)          (293)
                                               -------------  -------------
        Net cash provided by operating
         activities                                    2,400         12,639
                                               -------------  -------------
Cash flows from investing activities:
    Investment in property, plant and
     equipment                                        (1,385)        (4,539)
    Proceeds from sale of property, plant and
     equipment                                           217            999
    Purchases of available-for-sale securities
     and other investments                               (96)           (96)
    Maturities and sales of available-for-sale
     securities and other investments                      9             68
    Payments made in connection with business
     acquisitions, net of cash acquired              (10,211)       (10,480)
    Proceeds from business divestiture, net                -             89
                                               -------------  -------------
        Net cash used in investing activities        (11,466)       (13,959)
                                               -------------  -------------
Cash flows from financing activities:
    Issuance (repayment) of commercial paper
     and notes payable, net                              262         (1,270)
    Issuance of debt                                   4,644         11,942
    Payment of debt                                      (65)        (2,336)
    Issuance of common stock under employee
     stock plans                                          51            896
    Repurchase of common stock                          (500)       (10,117)
    Excess tax benefit from stock-based
     compensation                                          3            163
    Dividends                                           (239)          (844)
                                               -------------  -------------
        Net cash provided by (used in)
         financing activities                          4,156         (1,566)
                                               -------------  -------------
Decrease in cash and cash equivalents                 (4,910)        (2,886)
Cash and cash equivalents at beginning of
 period                                               12,953         10,929
                                               -------------  -------------
Cash and cash equivalents at end of period     $       8,043  $       8,043
                                               =============  =============

                  HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
                            SEGMENT INFORMATION
                                (Unaudited)
                               (In millions)
                                              Three months ended
                                   ----------------------------------------
                                    October 31,    July 31,     October 31,
                                       2011          2011          2010
                                   ------------  ------------  ------------
Net revenue:(a)
  Services                         $      9,281  $      9,089  $      9,125
  Enterprise Servers, Storage and
   Networking                             5,655         5,396         5,888
  HP Software                               976           780           763
  Personal Systems Group                 10,118         9,592        10,283
  Imaging and Printing Group              6,321         6,087         6,995
  HP Financial Services                     952           932           809
  Corporate Investments                     (94)          266           135
                                   ------------  ------------  ------------
    Total Segments                       33,209        32,142        33,998
  Eliminations of intersegment net
   revenue and other                     (1,087)         (953)         (720)
                                   ------------  ------------  ------------
    Total HP Consolidated Net
     Revenue                       $     32,122  $     31,189  $     33,278
                                   ============  ============  ============
Earnings from operations:(a)
  Services                         $      1,188  $      1,225  $      1,500
  Enterprise Servers, Storage and
   Networking                               733           699           888
  HP Software                               270           151           261
  Personal Systems Group                    578           567           568
  Imaging and Printing Group                808           892         1,220
  HP Financial Services                      98            88            73
  Corporate Investments                    (903)         (332)         (157)
                                   ------------  ------------  ------------
    Total Segments                        2,772         3,290         4,353
  Corporate and unallocated costs
   and eliminations                        (196)         (114)         (239)
  Unallocated costs related to
   stock-based compensation
   expense                                 (192)         (130)         (109)
  Amortization of purchased
   intangible assets                       (411)         (358)         (424)
  Restructuring charges                    (179)         (150)         (235)
  Acquisition-related charges              (114)          (18)          (51)
  Impairment of goodwill and
   purchased intangible assets             (885)            -             -
  Interest and other, net                  (401)         (121)          (81)
                                   ------------  ------------  ------------
Total HP Consolidated Earnings
 Before Taxes                      $        394  $      2,399  $      3,214
                                   ============  ============  ============

(a) Certain fiscal 2011 organizational reclassifications have been reflected
    retroactively to provide improved visibility and comparability. For each
    of the quarters in fiscal year 2010, the reclassifications resulted in
    the transfer of revenue and operating profit among the Enterprise
    Servers, Storage and Networking, Services, HP Software and Corporate
    Investments financial reporting segments. Reclassifications between
    segments included the transfer of the networking business from Corporate
    Investments to Enterprise Servers, Storage and Networking, the transfer
    of the communications and media solutions business from HP Software to
    Services, and the transfer of the business intelligence business from HP
    Software to Corporate Investments. There was no impact on the previously
    reported financial results for the Personal Systems Group, HP Financial
    Services and Imaging and Printing Group segments.

                  HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
                            SEGMENT INFORMATION
                                (Unaudited)
                               (In millions)
                                                      Twelve months ended
                                                          October 31,
                                                   ------------------------
                                                       2011         2010
                                                   -----------  -----------
Net revenue:(a)
  Services                                         $    35,954  $    35,529
  Enterprise Servers, Storage and Networking            22,241       20,356
  HP Software                                            3,217        2,729
  Personal Systems Group                                39,574       40,741
  Imaging and Printing Group                            25,783       25,764
  HP Financial Services                                  3,596        3,047
  Corporate Investments                                    322          346
                                                   -----------  -----------
    Total Segments                                     130,687      128,512
  Eliminations of intersegment net revenue and
   other                                                (3,442)      (2,479)
                                                   -----------  -----------
    Total HP Consolidated Net Revenue              $   127,245  $   126,033
                                                   ===========  ===========
Earnings from operations:(a)
  Services                                         $     5,149  $     5,661
  Enterprise Servers, Storage and Networking             3,026        2,825
  HP Software                                              698          782
  Personal Systems Group                                 2,350        2,032
  Imaging and Printing Group                             3,973        4,412
  HP Financial Services                                    348          281
  Corporate Investments                                 (1,616)        (366)
                                                   -----------  -----------
    Total Segments                                      13,928       15,627
  Corporate and unallocated costs and eliminations        (314)        (614)
  Unallocated costs related to stock-based
   compensation expense                                   (618)        (613)
  Amortization of purchased intangible assets           (1,607)      (1,484)
  Restructuring charges                                   (645)      (1,144)
  Acquisition-related charges                             (182)        (293)
  Impairment of goodwill and purchased intangible
   assets                                                 (885)           -
  Interest and other, net                                 (695)        (505)
                                                   -----------  -----------
Total HP Consolidated Earnings Before Taxes        $     8,982  $    10,974
                                                   ===========  ===========

(a) Certain fiscal 2011 organizational reclassifications have been reflected
    retroactively to provide improved visibility and comparability. For each
    of the quarters in fiscal year 2010, the reclassifications resulted in
    the transfer of revenue and operating profit among the Enterprise
    Servers, Storage and Networking, Services, HP Software and Corporate
    Investments financial reporting segments. Reclassifications between
    segments included the transfer of the networking business from Corporate
    Investments to Enterprise Servers, Storage and Networking, the transfer
    of the communications and media solutions business from HP Software to
    Services, and the transfer of the business intelligence business from HP
    Software to Corporate Investments. There was no impact on the previously
    reported financial results for the Personal Systems Group, HP Financial
    Services and Imaging and Printing Group segments.

                 HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
                    SEGMENT / BUSINESS UNIT INFORMATION
                                (Unaudited)
                               (In millions)
                                                              Growth rate
                                    Three months ended            (%)
                               ----------------------------  -------------
                                October             October
                                 31,     July 31,    31,
                                 2011      2011      2010     Q/Q     Y/Y
                               --------  --------  --------  -----   -----
Net revenue:(a)
  Services
    Infrastructure Technology
     Outsourcing               $  3,886  $  3,884  $  3,851      0%      1%
    Technology Services           2,810     2,754     2,733      2%      3%
    Application Services          1,798     1,698     1,763      6%      2%
    Business Process
     Outsourcing                    683       658       695      4%     (2%)
    Other                           104        95        83      9%     25%
                               --------  --------  --------
      Total Services              9,281     9,089     9,125      2%      2%
                               --------  --------  --------
  Enterprise Servers, Storage
   and Networking
    Industry Standard Servers     3,384     3,302     3,530      2%     (4%)
    Storage                       1,088       976     1,044     11%      4%
    Business Critical Systems       535       459       695     17%    (23%)
    HP Networking(b)                648       659       619     (2%)     5%
                               --------  --------  --------
      Total Enterprise
       Servers, Storage and
       Networking                 5,655     5,396     5,888      5%     (4%)
                               --------  --------  --------
  HP Software(c)                    976       780       763     25%     28%
                               --------  --------  --------
  Personal Systems Group(d)
    Notebooks                     5,390     5,082     5,623      6%     (4%)
    Desktops                      3,946     3,777     3,928      4%      0%
    Workstations                    593       547       529      8%     12%
    Other                           189       186       203      2%     (7%)
                               --------  --------  --------
      Total Personal Systems
       Group                     10,118     9,592    10,283      5%     (2%)
                               --------  --------  --------
  Imaging and Printing Group
    Supplies                      4,041     4,143     4,707     (2%)   (14%)
    Commercial Hardware           1,596     1,292     1,541     24%      4%
    Consumer Hardware               684       652       747      5%     (8%)
                               --------  --------  --------
      Total Imaging and
       Printing Group             6,321     6,087     6,995      4%    (10%)
                               --------  --------  --------
  HP Financial Services             952       932       809      2%     18%
                               --------  --------  --------
  Corporate Investments             (94)      266       135   (135%)  (170%)
                               --------  --------  --------
    Total Segments               33,209    32,142    33,998      3%     (2%)
                               --------  --------  --------
Eliminations of intersegment
 net revenue and other           (1,087)     (953)     (720)    14%     51%
                               --------  --------  --------
    Total HP Consolidated Net
     Revenue                   $ 32,122  $ 31,189  $ 33,278      3%     (3%)
                               ========  ========  ========

(a) Certain fiscal 2011 organizational reclassifications have been reflected
    retroactively to provide improved visibility and comparability. For each
    of the quarters in fiscal year 2010, the reclassifications resulted in
    the transfer of revenue among the Enterprise Servers, Storage and
    Networking, Services, HP Software and Corporate Investments financial
    reporting segments. Reclassifications between segments included the
    transfer of the networking business from Corporate Investments to
    Enterprise Servers, Storage and Networking, the transfer of the
    communications and media solutions business from HP Software to
    Services, and the transfer of the business intelligence business from HP
    Software to Corporate Investments. In addition, revenue was transferred
    among the business units within the Services and Personal Systems Group
    segments. There was no impact on the previously reported financial
    results for the HP Financial Services and Imaging and Printing Group
    segments or for the business units within the Imaging and Printing Group
    segment.
(b) The networking business was added to the Enterprise Servers, Storage and
    Networking segment in fiscal 2011.
(c) The Business Technology Optimization and Other Software business units
    were consolidated into a single business unit within the HP Software
    segment in fiscal 2011.
(d) The Handhelds business unit, which includes devices that run on Windows
    Mobile software, was reclassified into the Other business unit within
    the Personal Systems Group in fiscal 2011.

                  HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
                    SEGMENT / BUSINESS UNIT INFORMATION
                                (Unaudited)
                               (In millions)
                                                      Twelve months ended
                                                          October 31,
                                                   ------------------------
                                                       2011         2010
                                                   -----------  -----------
Net revenue:(a)
  Services
    Infrastructure Technology Outsourcing          $    15,189  $    14,942
    Technology Services                                 10,879       10,627
    Application Services                                 6,852        6,792
    Business Process Outsourcing                         2,672        2,872
    Other                                                  362          296
                                                   -----------  -----------
      Total Services                                    35,954       35,529
                                                   -----------  -----------
  Enterprise Servers, Storage and Networking
    Industry Standard Servers                           13,521       12,574
    Storage                                              4,056        3,785
    Business Critical Systems                            2,095        2,292
    HP Networking(b)                                     2,569        1,705
                                                   -----------  -----------
      Total Enterprise Servers, Storage and
       Networking                                       22,241       20,356
                                                   -----------  -----------
  HP Software(c)                                         3,217        2,729
                                                   -----------  -----------
  Personal Systems Group(d)
    Notebooks                                           21,319       22,602
    Desktops                                            15,260       15,519
    Workstations                                         2,216        1,786
    Other                                                  779          834
                                                   -----------  -----------
      Total Personal Systems Group                      39,574       40,741
                                                   -----------  -----------
  Imaging and Printing Group
    Supplies                                            17,154       17,249
    Commercial Hardware                                  5,790        5,569
    Consumer Hardware                                    2,839        2,946
                                                   -----------  -----------
      Total Imaging and Printing Group                  25,783       25,764
                                                   -----------  -----------
  HP Financial Services                                  3,596        3,047
                                                   -----------  -----------
  Corporate Investments                                    322          346
                                                   -----------  -----------
    Total Segments                                     130,687      128,512
                                                   -----------  -----------
  Eliminations of intersegment net revenue and
   other                                                (3,442)      (2,479)
                                                   -----------  -----------
    Total HP Consolidated Net Revenue              $   127,245  $   126,033
                                                   ===========  ===========

(a) Certain fiscal 2011 organizational reclassifications have been reflected
    retroactively to provide improved visibility and comparability. For each
    of the quarters in fiscal year 2010, the reclassifications resulted in
    the transfer of revenue among the Enterprise Servers, Storage and
    Networking, Services, HP Software and Corporate Investments financial
    reporting segments. Reclassifications between segments included the
    transfer of the networking business from Corporate Investments to
    Enterprise Servers, Storage and Networking, the transfer of the
    communications and media solutions business from HP Software to
    Services, and the transfer of the business intelligence business from HP
    Software to Corporate Investments. In addition, revenue was transferred
    among the business units within the Services and Personal Systems Group
    segments. There was no impact on the previously reported financial
    results for the HP Financial Services and Imaging and Printing Group
    segments or for the business units within the Imaging and Printing Group
    segment.
(b) The networking business was added to the Enterprise Servers, Storage and
    Networking segment in fiscal 2011.
(c) The Business Technology Optimization and Other Software business units
    were consolidated into a single business unit within the HP Software
    segment in fiscal 2011.
(d) The Handhelds business unit, which includes devices that run on Windows
    Mobile software, was reclassified into the Other business unit within
    the Personal Systems Group in fiscal 2011.

                  HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
               SEGMENT NON-GAAP OPERATING MARGIN SUMMARY DATA
                                (Unaudited)
                               (In millions)
                                      Three months     Change in Operating
                                          ended           Margin (pts)
                                      ------------   ----------------------
                                      October 31,
                                          2011           Y/Y         Q/Q
                                      ------------   ----------  ----------
Non-GAAP Operating Margin:(a)
  Services                                    12.8%    (3.6 pts)   (0.7 pts)
  Enterprise Servers, Storage and
   Networking                                 13.0%    (2.1 pts)    0.0 pts
  HP Software                                 27.7%    (6.5 pts)    8.3 pts
  Personal Systems Group                       5.7%     0.2 pts    (0.2 pts)
  Imaging and Printing Group                  12.8%    (4.6 pts)   (1.9 pts)
  HP Financial Services                       10.3%     1.3 pts     0.9 pts
  Corporate Investments                     (308.3%) (192.0 pts) (183.5 pts)
    Total Segments                            10.6%    (2.2 pts)    0.4 pts
    Total HP Consolidated Non-GAAP
     Operating Margin                          9.7%    (2.3 pts)   (0.1 pts)

(a) Certain fiscal 2011 organizational reclassifications have been reflected
    retroactively to provide improved visibility and comparability. For each
    of the quarters in fiscal year 2010, the reclassifications resulted in
    the transfer of revenue and operating profit among the Enterprise
    Servers, Storage and Networking, Services, HP Software and Corporate
    Investments financial reporting segments.  Reclassifications between
    segments included the transfer of the networking business from Corporate
    Investments to Enterprise Servers, Storage and Networking, the transfer
    of the communications and media solutions business from HP Software to
    Services, and the transfer of the business intelligence business from HP
    Software to Corporate Investments.  There was no impact on the
    previously reported financial results for the Personal Systems Group, HP
    Financial Services and Imaging and Printing Group segments.

                  HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
                    CALCULATION OF NET EARNINGS PER SHARE
                                 (Unaudited)
                   (In millions except per share amounts)
                                                 Three months ended
                                       -------------------------------------
                                       October 31,    July 31,   October 31,
                                           2011         2011         2010
                                       -----------  -----------  -----------
Numerator:
  GAAP net earnings                    $       239  $     1,926  $     2,538
                                       ===========  ===========  ===========
  Non-GAAP net earnings                $     2,350  $     2,282  $     3,064
                                       ===========  ===========  ===========
Denominator:
  Weighted-average shares used to
   compute basic EPS                         1,989        2,054        2,249
  Dilutive effect of employee stock
   plans                                        16           26           48
                                       -----------  -----------  -----------
  Weighted-average shares used to
   compute diluted EPS                       2,005        2,080        2,297
                                       ===========  ===========  ===========
GAAP net earnings per share:
  Basic(a)                             $      0.12  $      0.94  $      1.13
  Diluted(c)                           $      0.12  $      0.93  $      1.10
Non-GAAP net earnings per share:
  Basic(b)                             $      1.18  $      1.11  $      1.36
  Diluted(c)                           $      1.17  $      1.10  $      1.33

(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)
                                                        Twelve months ended
                                                            October 31,
                                                      ----------------------
                                                         2011        2010
                                                      ----------  ----------
Numerator:
  GAAP net earnings                                   $    7,074  $    8,761
                                                      ==========  ==========
  Non-GAAP net earnings                               $   10,379  $   10,866
                                                      ==========  ==========
Denominator:
  Weighted-average shares used to compute basic EPS        2,094       2,319
  Dilutive effect of employee stock plans                     34          53
                                                      ----------  ----------
  Weighted-average shares used to compute diluted EPS      2,128       2,372
                                                      ==========  ==========
GAAP net earnings per share:
  Basic(a)                                            $     3.38  $     3.78
  Diluted(c)                                          $     3.32  $     3.69
Non-GAAP net earnings per share:
  Basic(b)                                            $     4.96  $     4.69
  Diluted(c)                                          $     4.88  $     4.58

(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 reflects the elimination of contra revenue associated with sales incentive programs implemented 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.

SOURCE: HP

 

Apple’s MacBook shipments are expected to remain strong during the fourth quarter of this year, DigiTimes reported on Tuesday. There has been a bit of speculation that the company’s shipments might be affected due to flooding in Thailand, which has impacted hard drive manufacturing, and a recent order for the company’s chassis supplier to freeze its production line. The chassis supplier, Catcher Technology, was reportedly ordered to stop production in October over concerns that the company was over-polluting. Apple’s computer manufacturer, Quanta Computer, shipped 5.3 million units last month and sources speaking to DigiTimes said the increase was largely related to orders for Apple’s MacBook Pro. The MacBook Air is reportedly faring just as well. According to new NPD figures that were revealed in a recent Morgan Stanley note, the MacBook Air was responsible for 28% of all Apple notebook shipments during the first half of this year.

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Apple on Tuesday reported its earnings for the fourth fiscal quarter of 2011. Wall Street was expecting revenue of $29.5 billion and earnings of $7.29 per share. The company delivered revenue of $28.27 billion and earnings of $7.05 per share. Apple sold 17.1 million iPhones, 11.1 million iPads, and 4.89 million Macs. While this was Apple’s biggest September quarter ever, the company still missed on most Wall Street estimates. During the third fiscal quarter this year, Apple recorded revenue of $28.57 billion on sales of 20.34 million iPhones, 9.25 million iPads, and 3.95 million Macs into channels. Apple’s full press release is after the break.

Apple Reports Fourth Quarter ResultsFont size: A | A | A
4:30 PM ET 10/18/11 | BusinessWire
–Highest September Quarter Revenue and Earnings Ever

Apple(R) today announced financial results for its fiscal 2011 fourth quarter ended September 24, 2011. The Company posted quarterly revenue of $28.27 billion and quarterly net profit of $6.62 billion, or $7.05 per diluted share. These results compare to revenue of $20.34 billion and net quarterly profit of $4.31 billion, or $4.64 per diluted share, in the year-ago quarter. Gross margin was 40.3 percent compared to 36.9 percent in the year-ago quarter. International sales accounted for 63 percent of the quarter’s revenue.

The Company sold 17.07 million iPhones in the quarter, representing 21 percent unit growth over the year-ago quarter. Apple sold 11.12 million iPads during the quarter, a 166 percent unit increase over the year-ago quarter. The Company sold 4.89 million Macs during the quarter, a 26 percent unit increase over the year-ago quarter. Apple sold 6.62 million iPods, a 27 percent unit decline from the year-ago quarter.

“We are thrilled with the very strong finish of an outstanding fiscal 2011, growing annual revenue to $108 billion and growing earnings to $26 billion,” said Tim Cook, Apple’s CEO. “Customer response to iPhone 4S has been fantastic, we have strong momentum going into the holiday season, and we remain really enthusiastic about our product pipeline.”

“We are extremely pleased with our record September quarter revenue and earnings and with cash generation of $5.4 billion during the quarter,” said Peter Oppenheimer, Apple’s CFO. “Looking ahead to the first fiscal quarter of 2012, which will span 14 weeks rather than 13, we expect revenue of about $37 billion and we expect diluted earnings per share of about $9.30.”

Apple will provide live streaming of its Q4 2011 financial results conference call beginning at 2:00 p.m. PDT on October 18, 2011 at www.apple.com/quicktime/qtv/earningsq411. This webcast will also be available for replay for approximately two weeks thereafter.

This press release contains forward-looking statements including without limitation those about the Company’s estimated revenue and earnings per share. These statements involve risks and uncertainties, and actual results may differ. Risks and uncertainties include without limitation the effect of competitive and economic factors, and the Company’s reaction to those factors, on consumer and business buying decisions with respect to the Company’s products; continued competitive pressures in the marketplace; the ability of the Company to deliver to the marketplace and stimulate customer demand for new programs, products, and technological innovations on a timely basis; the effect that product introductions and transitions, changes in product pricing or mix, and/or increases in component costs could have on the Company’s gross margin; the inventory risk associated with the Company’s need to order or commit to order product components in advance of customer orders; the continued availability on acceptable terms, or at all, of certain components and services essential to the Company’s business currently obtained by the Company from sole or limited sources; the effect that the Company’s dependency on manufacturing and logistics services provided by third parties may have on the quality, quantity or cost of products manufactured or services rendered; risks associated with the Company’s international operations; the Company’s reliance on third-party intellectual property and digital content; the potential impact of a finding that the Company has infringed on the intellectual property rights of others; the Company’s dependency on the performance of distributors, carriers and other resellers of the Company’s products; the effect that product and service quality problems could have on the Company’s sales and operating profits; the continued service and availability of key executives and employees; war, terrorism, public health issues, natural disasters, and other circumstances that could disrupt supply, delivery, or demand of products; and unfavorable results of other legal proceedings. More information on potential factors that could affect the Company’s financial results is included from time to time in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s public reports filed with the SEC, including the Company’s Form 10-K for the fiscal year ended September 25, 2010, its Forms 10-Q for the quarters ended December 25, 2010; March 26, 2011; and June 25, 2011; and its Form 10-K for the fiscal year ended September 24, 2011 to be filed with the SEC. The Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.

Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork and professional software. Apple leads the digital music revolution with its iPods and iTunes online store. Apple has reinvented the mobile phone with its revolutionary iPhone and App Store, and has recently introduced iPad 2 which is defining the future of mobile media and computing devices.

NOTE TO EDITORS: For additional information visit Apple’s PR website (www.apple.com/pr), or call Apple’s Media Helpline at (408) 974-2042.

(C) 2011 Apple Inc. All rights reserved. Apple, the Apple logo, Mac, Mac OS and Macintosh are trademarks of Apple. Other company and product names may be trademarks of their respective owners.

Asus will launch as many as six Ultrabooks in October, Asus chairman Jonney Shih said on Monday. The notebooks will offer screen sizes between 11.6-inches and 13.3-inches. Intel detailed its plans to introduce a new category of notebooks, which it dubbed “Ultrabooks” in May. The chip maker hopes the new category will dominate 40% of the consumer notebook market by the end of 2012 and says the devices will combine the performance of today’s laptops with a tablet-like experience. Earlier reports suggested that mass production of Ultrabooks will begin in September and Intel recently invested $300 million in an effort to speed up the process of creating the devices. The first such device to hit the market is largely expected to be the ASUS UX21. Acer, Asus and Lenovo have all detailed plans to launch sub-$1,000 Ultrabooks during the fourth quarter but Shih said the six from Asus will be priced between $900 and $2,000.

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Rumors began swirling on Tuesday suggesting Sprint will launch the iPhone 5 and the iPhone 4 later this year, and at least one analyst thinks Sprint could move a fair number of Apple devices. “Sprint is the third largest carrier in the US with 52m subscribers which would be a nice expansion of Apple’s addressable market in the US,” UBS executive director Maynard Um said in a note to investors on Wednesday, adding that he expects the Overland Park, Kansas-based company to sell 1.2 million iPhones. Senior research analyst William Power with Baird Research is not as convinced the phone will be a hit. While the device will fill a “gaping competitive hole,” Power believes the phone could have adverse effects on earnings due to “upfront iPhone subsidy costs.” “We suspect that many Sprint subscribers who wanted the iPhone may have already left for AT&T or Verizon,” Power added.

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