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 Q1 FY09 earnings conference call is accessible via an audio webcast at www.hp.com/investor/q12009webcast.

About HP

HP, the world’s largest technology company, provides printing and personal computing products and IT services, software and solutions that simplify the technology experience for consumers and businesses. 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 operating profit, non-GAAP operating margin, non-GAAP net earnings, non-GAAP diluted earnings per share and gross cash. 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 operating profit, operating margin, net earnings, diluted earnings per share, or cash and cash equivalents 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, acquisition synergies, currency exchange rates or other financial items; any statements of the plans, strategies, and objectives of management for future operations, including 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 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 macroeconomic and geopolitical trends and events; execution and performance of contracts by HP and its suppliers, customers and partners; the challenge of managing asset levels, including inventory; the difficulty of aligning expense levels with revenue changes; assumptions related to pension and other post-retirement costs; expectations and assumptions relating to the execution and timing of cost reduction programs and 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, 2008 and HP’s other filings with the Securities and Exchange Commission. 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 Quarterly Report on Form 10-Q for the fiscal quarter ended January 31, 2009. In particular, determining HP’s actual tax balances and provisions as of January 31, 2009 requires extensive internal and external review of tax data (including consolidating and reviewing the tax provisions of numerous domestic and foreign entities), which is being completed in the ordinary course of preparing HP’s Form 10-Q. HP assumes no obligation and does not intend to update these forward-looking statements.

Note to editors: More news from HP, including links to RSS feeds, is available at http://www.hp.com/hpinfo/newsroom/.

© 2008 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
		January 31, 2009				October 31, 2008 (c)				January 31, 2008 (c)
Net revenue		$	28,800			$	33,603			$	28,467
Costs and expenses (a) :
Cost of sales			22,069				25,853				21,444
Research and development			732				842				898
Selling, general and administrative			2,893				3,506				3,296
Amortization of purchased intangible assets			412				337				206
In-process research and development charges			6				32				-
Restructuring charges			146				251				10
Acquisition-related charges			48				41				-
Total costs and expenses			26,306				30,862				25,854
Earnings from operations			2,494				2,741				2,613
Interest and other, net			(232	)			(98	)			72
Earnings before taxes			2,262				2,643				2,685
Provision for taxes (b)			408				531				552
Net earnings		$	1,854			$	2,112			$	2,133
Net earnings per share:
Basic		$	0.77			$	0.87			$	0.83
Diluted		$	0.75			$	0.84			$	0.80
Cash dividends declared per share		$	0.16			$	-			$	0.16
Weighted-average shares used to compute net earnings per share:
Basic			2,410				2,440				2,560
Diluted			2,464				2,516				2,655
(a) Stock-based compensation expense included under SFAS 123(R) was as follows:
Cost of sales		$	52			$	46			$	36
Research and development			17				17				20
Selling, general and administrative			85				94				101
Acquisition-related charges			6				-				-
Total costs and expenses		$	160			$	157			$	157
(b) Tax benefit from stock-based compensation		$	(48	)		$	(37	)		$	(47	)
(c) Certain pursuit-related costs previously reported as Cost of sales have been realigned retroactively to Selling, general and administrative expenses due to the organizational realignments occurring within HP’s service offerings portfolio.

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
ADJUSTMENTS TO GAAP NET EARNINGS, EARNINGS FROM OPERATIONS,
OPERATING MARGIN AND EARNINGS PER SHARE
(Unaudited)
(In millions except per share amounts)
		Three months ended January 31, 2009				Diluted earnings per share				Three months ended October 31, 2008				Diluted earnings per share				Three months ended January 31, 2008				Diluted earnings per share
GAAP net earnings		$	1,854			$	0.75			$	2,112			$	0.84			$	2,133			$	0.80
Non-GAAP adjustments:
Amortization of purchased intangible assets			412				0.17				337				0.13				206				0.08
In-process research and development charges			6				-				32				0.01				-				-
Restructuring charges			146				0.06				251				0.10				10				-
Acquisition-related charges			48				0.02				41				0.02				-				-
Adjustments for taxes			(181	)			(0.07	)			(179	)			(0.07	)			(58	)			(0.02	)
Non-GAAP net earnings		$	2,285			$	0.93			$	2,594			$	1.03			$	2,291			$	0.86
GAAP earnings from operations		$	2,494							$	2,741							$	2,613
Non-GAAP adjustments:
Amortization of purchased intangible assets			412								337								206
In-process research and development charges			6								32								-
Restructuring charges			146								251								10
Acquisition-related charges			48								41								-
Non-GAAP earnings from operations		$	3,106							$	3,402							$	2,829
GAAP operating margin			9	%							8	%							9	%
Non-GAAP adjustments			2	%							2	%							1	%
Non-GAAP operating margin			11	%							10	%							10	%

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(In millions)
	January 31, 2009			October 31, 2008
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	11,189		$	10,153
Short-term investments		66			93
Accounts receivable		14,769			16,928
Financing receivables		2,316			2,314
Inventory		7,629			7,879
Other current assets		12,912			14,361
Total current assets		48,881			51,728
Property, plant and equipment		10,774			10,838
Long-term financing receivables and other assets		10,111			10,468
Goodwill and purchased intangible assets		39,868			40,297
Total assets	$	109,634		$	113,331
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and short-term borrowings	$	10,199		$	10,176
Accounts payable		11,231			14,138
Employee compensation and benefits		2,951			4,159
Taxes on earnings		699			869
Deferred revenue		6,591			6,287
Other accrued liabilities		15,316			17,310
Total current liabilities		46,987			52,939
Long-term debt		10,259			7,676
Other liabilities		12,801			13,774
Stockholders' equity		39,587			38,942
Total liabilities and stockholders' equity	$	109,634		$	113,331

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(In millions)
	Three months ended
	January 31, 2009				January 31, 2008
Cash flows from operating activities:
Net earnings	$	1,854			$	2,133
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		1,214				749
Stock-based compensation expense		154				157
Provision for bad debt and inventory		168				78
In-process research and development charges		6				-
Restructuring charges		146				10
Acquisition-related charges		48				-
Deferred taxes on earnings		(63	)			361
Excess tax benefit from stock-based compensation		(13	)			(88	)
Other, net		(17	)			6
Changes in assets and liabilities:
Accounts and financing receivables		1,780				1,007
Inventory		156				54
Accounts payable		(2,889	)			(659	)
Taxes on earnings		300				(92	)
Restructuring		(209	)			(31	)
Other assets and liabilities		(1,509	)			(498	)
Net cash provided by operating activities		1,126				3,187
Cash flows from investing activities:
Investment in property, plant and equipment		(828	)			(611	)
Proceeds from sale of property, plant and equipment		152				88
Purchases of available-for-sale securities and other investments		-				(20	)
Maturities and sales of available-for-sale securities and other investments		46				106
Payments made in connection with business acquisitions, net		(345	)			(264	)
Net cash used in investing activities		(975	)			(701	)
Cash flows from financing activities:
Issuance (repayment) of commercial paper and notes payable, net		57				(899	)
Issuance of debt		2,016				16
Payment of debt		(69	)			(105	)
Issuance of common stock under employee stock plans		299				554
Repurchase of common stock		(1,238	)			(3,324	)
Excess tax benefit from stock-based compensation		13				88
Dividends		(193	)			(206	)
Net cash provided by (used in)financing activities		885				(3,876	)
Increase (decrease) in cash and cash equivalents		1,036				(1,390	)
Cash and cash equivalents at beginning of period		10,153				11,293
Cash and cash equivalents at end of period	$	11,189			$	9,903

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
SEGMENT INFORMATION
(Unaudited)
(In millions)
			Three months ended
			January 31, 2009				October 31, 2008 (a)				January 31, 2008 (a)
Net revenue:
	Enterprise Storage and Servers		$	3,948			$	5,059			$	4,820
	Services			8,746				8,277				4,052
	HP Software			878				1,148				947
	Technology Solutions Group			13,572				14,484				9,819
	Personal Systems Group			8,787				11,179				10,791
	Imaging and Printing Group			5,981				7,572				7,357
	HP Financial Services			636				691				642
	Corporate Investments			196				246				218
	Total Segments			29,172				34,172				28,827
	Eliminations of intersegment net revenue and other			(372	)			(569	)			(360	)
	Total HP Consolidated		$	28,800			$	33,603			$	28,467
Earnings from operations:
	Enterprise Storage and Servers		$	405			$	705			$	673
	Services			1,123				945				499
	HP Software			140				211				49
	Technology Solutions Group			1,668				1,861				1,221
	Personal Systems Group			435				616				628
	Imaging and Printing Group			1,105				1,155				1,142
	HP Financial Services			41				51				43
	Corporate Investments			(19	)			9				8
	Total Segments			3,230				3,692				3,042
	Corporate and unallocated costs and eliminations			24				(153	)			(89	)
	Unallocated costs related to stock-based compensation expense			(148	)			(137	)			(124	)
	Amortization of purchased intangible assets			(412	)			(337	)			(206	)
	In-process research and development charges			(6	)			(32	)			-
	Restructuring charges			(146	)			(251	)			(10	)
	Acquisition-related charges			(48	)			(41	)			-
	Interest and other, net			(232	)			(98	)			72
Total HP Consolidated Earnings Before Taxes			$	2,262			$	2,643			$	2,685
(a) Certain fiscal 2009 organizational reclassifications have been reflected retroactively to provide improved visibility and comparability. For each of the quarters in fiscal year 2008, the reclassifications resulted in the transfer of revenue and operating profit among the Services, HP Software and Imaging and Printing Group financial reporting segments. In addition, certain previously allocated costs were reclassified to unallocated costs related to stock-based compensation expense. There was no impact on the previously reported financial results for the Enterprise Storage and Servers, Personal Systems Group, HP Financial Services and Corporate Investments segments.

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
SEGMENT / BUSINESS UNIT INFORMATION
(Unaudited)
(In millions)
		Three months ended
		January 31, 2009				October 31, 2008 (a)				January 31, 2008 (a)
Net revenue:
Industry standard servers		$	2,322			$	2,977			$	2,988
Business critical systems			713				935				855
Storage			913				1,147				977
Enterprise Storage and Servers			3,948				5,059				4,820
Technology services			2,451				2,657				2,458
Infrastructure Technology Outsourcing			3,903				3,531				1,252
Application Services			1,592				1,427				306
Business Process Outsourcing			743				604				36
Other			57				58				-
Services (b)			8,746				8,277				4,052
Business technology optimization			594				786				618
Other			284				362				329
HP Software			878				1,148				947
Technology Solutions Group			13,572				14,484				9,819
Notebooks			4,907				6,270				5,664
Desktops			3,303				4,149				4,406
Workstations			333				470				462
Handhelds			57				79				89
Other			187				211				170
Personal Systems Group			8,787				11,179				10,791
Commercial Hardware			1,239				1,846				1,883
Consumer Hardware			692				918				1,105
Supplies			4,047				4,808				4,362
Other			3				-				7
Imaging and Printing Group			5,981				7,572				7,357
HP Financial Services			636				691				642
Corporate Investments			196				246				218
Total Segments			29,172				34,172				28,827
Eliminations of intersegment net revenue and other			(372	)			(569	)			(360	)
Total HP Consolidated		$	28,800			$	33,603			$	28,467
(a) Certain fiscal 2009 organizational reclassifications have been reflected retroactively to provide improved visibility and comparability. For each of the quarters in fiscal year 2008, the reclassifications resulted in the transfer of revenue among the Services, HP Software and Imaging and Printing Group financial reporting segments. In addition, revenue was transferred among the business units within the Services, HP Software, Imaging and Printing Group, and Personal Systems Group segments. There was no impact on the previously reported financial results for the Enterprise Storage and Servers, HP Financial Services and Corporate Investments segments.
(b) Infrastructure Technology Outsourcing, Application Services, Business Process Outsourcing and Other business units were added to the Services business segment. In addition, Outsourcing Services, Consulting and Integration and EDS business units within Services were disintegrated in fiscal 2009.

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
CALCULATION OF NET EARNINGS PER SHARE
(Unaudited)
(In millions except per share amounts)
		Three months ended
		January 31, 2009			October 31, 2008			January 31, 2008
Numerator:
Net earnings		$	1,854		$	2,112		$	2,133
Adjustment for interest expense on zero-coupon subordinated convertible notes, net of taxes			-			-			2
Net earnings, adjusted		$	1,854		$	2,112		$	2,135
Denominator:
Weighted-average shares used to compute basic EPS			2,410			2,440			2,560
Effect of dilutive securities:
Dilution from employee stock plans			54			76			87
Zero-coupon subordinated convertible notes			-			-			8
Dilutive potential common shares			54			76			95
Weighted-average shares used to compute diluted EPS			2,464			2,516			2,655
Net earnings per share:
Basic (a)		$	0.77		$	0.87		$	0.83
Diluted (b)		$	0.75		$	0.84		$	0.80
(a) HP's basic earnings per share was calculated based on net earnings and the weighted-average number of shares outstanding during the reporting period.
(b) The diluted earnings per share included additional dilution from potential issuance of common stock, such as stock issuable pursuant to exercise of stock options, vesting of restricted stock units and conversion of debt, except when such issuances would be anti-dilutive.

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
CALCULATION OF NON-GAAP NET EARNINGS PER SHARE
(Unaudited)
(In millions except per share amounts)
		Three months ended
		January 31, 2009			October 31, 2008			January 31, 2008
Numerator:
Non-GAAP net earnings		$	2,285		$	2,594		$	2,291
Adjustment for interest expense on zero-coupon subordinated convertible notes, net of taxes			-			-			2
Non-GAAP net earnings, adjusted		$	2,285		$	2,594		$	2,293
Denominator:
Weighted-average shares used to compute basic EPS			2,410			2,440			2,560
Effect of dilutive securities:
Dilution from employee stock plans			54			76			87
Zero-coupon subordinated convertible notes			-			-			8
Dilutive potential common shares			54			76			95
Weighted-average shares used to compute diluted EPS			2,464			2,516			2,655
Non-GAAP net earnings per share:
Basic (a)		$	0.95		$	1.06		$	0.89
Diluted (b)		$	0.93		$	1.03		$	0.86
(a) HP's basic earnings per share was calculated based on net earnings and the weighted-average number of shares outstanding during the reporting period.
(b) The diluted earnings per share included additional dilution from potential issuance of common stock, such as stock issuable pursuant to exercise of stock options, vesting of restricted stock units and conversion of debt, except when such issuances would be anti-dilutive.

Use of Non-GAAP Financial Measures