Hewlett-Packard Company (HPQ)

F4Q2010 Earnings Call Transcript

November 22, 2010 5:00 pm ET


Steve Fieler – VP, IR

Leo Apotheker – President and CEO

Cathie Lesjak – EVP and CFO

Ann Livermore – EVP, Enterprise Business

Todd Bradley – EVP, Personal Systems Group

Vyomesh Joshi – EVP, Imaging and Printing Group


Richard Gardner – Citigroup

Benjamin Reitzes – Barclays Capital

Keith Bachman – Bank of Montreal

Toni Sacconaghi, Jr. – Sanford Bernstein

Scott Craig – Bank of America-Merrill Lynch

Katy Huberty – Morgan Stanley

Brian Alexander – Raymond James

Aaron Rakers – Stifel Nicolaus

Maynard Um – UBS

Jayson Noland – Robert Baird

Brian Marshall – Gleacher & Company

Bill Fearnley – Janney Capital Markets

Mark Moskowitz – JP Morgan

Shannon Cross – Cross Research Group



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Good day, ladies and gentlemen, and welcome to the fourth quarter 2010 Hewlett-Packard earnings conference call. My name is Michael and I will be your conference moderator for today's call. At this time, all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of the conference. (Operator instructions) As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the presentation over to your host for today's call, Mr. Steve Fieler, Vice President of Investor Relations. Please proceed.

Steve Fieler

Good afternoon. Welcome to our fourth quarter earnings conference call with Leo Apotheker, HP’s CEO and Cathie Lesjak, HP’s Chief Financial officer. Also joining us are Todd Bradley, Executive Vice President, for the Personal Systems Group; Ann Livermore, Executive Vice President of the HP Enterprise Business; and Vyomesh Joshi, Executive Vice President of the Imaging and Printing Group.

This call is being webcast. A replay of the webcast will be available shortly after the call for approximately one year.

Some information provided during this call may include forward-looking statements that are based on certain assumptions and are subject to a number of risks and uncertainties and actual future results may vary materially. Please refer to the risks described in HP's SEC reports, including our most recent Form 10-Q. The financial information discussed in connection with this call, including tax-related items, reflects estimates based on information available at this time and could differ materially from the amounts ultimately reported in HP's 2010 Form 10-K.

Earnings, operating margins, and similar items at the Company level are sometimes expressed on a non-GAAP basis and have been adjusted to exclude certain items, including amortization of purchased intangibles, restructuring charges, and acquisition-related charges. The comparable GAAP financial information and a reconciliation of non-GAAP amounts to GAAP are included in the tables in the slide presentation accompanying today's earnings release, both of which are available on the HP Investor Relations' webpage at www.hp.com.

I'll now turn the call over to Leo.

Leo Apotheker

Welcome to our fourth quarter earnings calls and thank you for joining us today. Since the last time we spoke, I have been meeting with our customers and partners as well as thousands of employees around the world. I joked on today of the announcement that I might set world record for travel and I think I might have actually done it. I have been listening, I have been learning and I have been immersing this over the business and today I'm even more excited and honored to be HP CEO.

HP is a Company with great momentum incredibly committed in terms of people, deep customer relationships and strong core businesses. I'm confident in our future and energized about the opportunity that lies ahead. When I look at our Q4 results, what's clear is that HP is winning in the market and we have an impressive ability to execute. I'm proud of our leadership team and our people for their continued focus doing what has been extraordinary time for the Company.

We finished our fiscal year with $126 billion in revenues. It's a 10% year-over-year increase or an incremental $11.5 billion of growth. We grew nearly $1 billion per month last year. During the same time, we expanded our non-GAAP operating profit faster than revenue, up 14% year-over-year and our non-GAAP EPS grew even faster at 19% for the full year. It is evidence of our strong operating leverage, our leadership positions, our ability to grow in higher margin categories and our strong balance sheet. We are carrying this momentum into FY'11.We have the ability to drive continued growth and at the same time, I remain committed to driving operational efficiencies into the years ahead. I'm confident in our updated FY'11 outlook, which Cathie will share with you in a moment.

Before Cathie provides more financial detail, however, I would like to share some of my initial observations about HP, our potential, and also errors where we need to do things better. Now bear in mind, these are just my initial thoughts. I have been on the job for just about three weeks now and I still have good amount of listening and data gathering to do. I intend to provide the more robust perspective in the next few months.

Well, now I will share three observations; one about customers, the second is about our employees, and third about our technologies. I have received great feedback from our customers thus far. They are asking for solution partner who have hardware and software technology, and business challenges. They want to access to information instantly no matter where they are and they want choice not proprietary logins.

The great majority are telling me that they want to do more business with HP. They are like our openness, our price performance, our industry-leading technologies, and our focus on manageability and security.

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