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Hewlett-Packard (HPQ)

Q1 2012 Earnings Call

February 22, 2012 5:00 pm ET


Steven Fieler -

Margaret C. Whitman - Chief Executive Officer, President and Director

Catherine A. Lesjak - Chief Financial Officer and Executive Vice President


Benjamin A. Reitzes - Barclays Capital, Research Division

Bill C. Shope - Goldman Sachs Group Inc., Research Division

Brian G. Alexander - Raymond James & Associates, Inc., Research Division

Shannon S. Cross - Cross Research LLC

Keith F. Bachman - BMO Capital Markets U.S.

Richard Gardner - Citigroup Inc, Research Division

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Good day, ladies and gentlemen, and welcome to the First Quarter 2012 Hewlett-Packard Earnings Conference Call. My name is Jeff, and I'll be your conference moderator for today's call. [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.

Steven Fieler

Good afternoon. Welcome to our first quarter 2012 earnings conference call with Meg Whitman, HP's Chief Executive Officer; and Cathie Lesjak, Chief Financial Officer. Before handing the call over to Meg, let me remind you that 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-K.

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 first quarter Form 10-Q. Revenue, 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, among other things, amortization of purchased intangibles, restructuring charges and acquisition-related charges. Comparable GAAP financial information and a reconciliation of non-GAAP amounts to GAAP are included in tables in the slide presentation accompanying today's earnings release, both of which are available on the HP Investor Relations web page at

Before I turn it over to Meg, I just wanted to briefly touch upon a financial reporting item. Each year, as part of our first quarter annual financial review, we review all reported segments and make any necessary changes to reflect any organizational shifts among our businesses. This year, these re-alignments resulted in the transfer of revenue and operating profit the Services, Imaging and Printing Group, Enterprise Servers, Storage and Networking, Software and Corporate Investments segment and a transfer of revenue among the business units within the Services segments. In addition, we have reclassified certain costs previously reported as cost of sales as selling, general and administrative expenses to better align these costs with the functional areas that benefit from those expenditures. This reclassification of costs did not impact segment reporting and relates only to the line item within the P&L in which the costs are booked. A detailed reconciliation of the changes, including historical data, is available on our Investor Relations website as well as furnished on our Form 8-K filed with the SEC. I want to be clear that the changes do not impact HP's previously reported consolidated net revenue, earnings from operations, net earnings or EPS. I'll now turn the call over to Meg.

Margaret C. Whitman

Thank you, Steve, and thanks to all of you for joining the call. Since I spoke to you last, I spent a great deal of time with our employees, our customers, partners and investors. Given some of the challenges of the last year, we've been working hard to set the right tone, calm the waters and reassure our stakeholders that HP is the same reliable company that they've known and admired for decades. I visited HP offices, hosting roundtables and employee meetings in Palo Alto, Cupertino, London, Vienna, Chicago, Houston, London and Alpharetta, Georgia. I spent some time with the sales force, communicated regularly with our senior leadership and worked very closely across the executive team. And I've been out with our customers. At HP DISCOVER in Vienna, we brought together more than 7,000 of our top enterprise customers in the biggest event in HP's history. And I participated in more than 80 customer visits, meetings and conversations. I've engaged with the channel through partner meetings, roundtables, interviews and, just last week, at the first-ever HP Global Partner Conference.

So what have I found? Certainly, I found some skepticism. But I have also found that we have incredible support. People who believe in HP, people who want us to win, people who want to work with us and build for the future. And every day, I learn something new about our technology and innovation, our solutions, often just a story about the role HP has played in someone's life or a customer's success. It's inspiring. The more time I spend listening and learning, the more committed and passionate I've become. I've also gotten to know many of you, our investors. And just as I have with our other stakeholders, I'm working hard to strengthen our clarity and transparency. I want you to understand where we're taking HP and why. Most of all, I want to set HP on a path to continue to meet and exceed our expectations for the longer term. I believe we've started on that journey during the past few months, but we have a long road ahead of us.

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