Hewlett-Packard (HPQ)

Corporate Investments

        Net revenue in Corporate Investments relates primarily to network infrastructure products sold under the brand "ProCurve Networking." For the three months ended January 31, 2010, revenue from network infrastructure products increased 12.9% as compared to the same period in fiscal 2009, driven by improved market demand and continued investment in sales coverage.

        Corporate Investments reported positive earnings from operations for the first three months of fiscal 2010 as compared to a loss from operations reported for the same period in fiscal 2009 due primarily to higher earnings from operations generated by network infrastructure products. Gross margin in Corporate Investments increased primarily as a result of lower product costs in the sale of network infrastructure products, the effect of which was partially offset by increased competitive pressure. The earnings from operations in Corporate Investments were offset by expenses carried in the segment associated with corporate development, global alliances and HP Labs; such expenses declined from the prior-year period.

Corporate Investments

        Corporate Investments includes Hewlett-Packard Laboratories, also known as HP Labs, and certain business incubation projects. Revenue in this segment is attributable to the sale of certain network infrastructure products, including Ethernet switch products that enhance computing and enterprise solutions under the brand ProCurve Networking. Corporate Investments also derives revenue from licensing specific HP technology to third parties.

Corporate Investments

        Net revenue in Corporate Investments relates primarily to network infrastructure products sold under the brand "ProCurve Networking." In fiscal 2009, revenue from network infrastructure products decreased 19.6% as compared to fiscal 2008, resulting from the slowdown in the networking market and a resulting decrease in sales of enterprise ethernet switch products. Partially offsetting the revenue decline was revenue resulting from the acquisition of Colubris Networks, Inc. ("Colubris"), which HP acquired in October 2008.

        Corporate Investments reported a loss from operations in fiscal 2009 as compared to the positive earnings from operations reported in fiscal 2008 due primarily to lower earnings from operations generated by network infrastructure products. Gross margin in Corporate Investments declined for fiscal 2009 as the result of a unit volume decline in the sale of network infrastructure products and

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Table of Contents

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)

competitive pricing pressure. The loss from operations in Corporate Investments was also impacted by expenses carried in the segment associated with corporate development, global alliances and HP Labs, which declined from fiscal 2008.

        In fiscal 2008, the majority of the net revenue in Corporate Investments related to network infrastructure products sold under the brand "ProCurve Networking," which grew 26.2% from fiscal 2007 as the result of continued increased sales of enterprise class gigabit and 10 gigabit Ethernet switch products. Fiscal 2008 network infrastructure revenue included a small amount of revenue from Colubris.

        Corporate Investments reported earnings from operations in fiscal 2008 as compared to losses in fiscal 2007 due primarily to increased earnings from operations generated by network infrastructure products, and operating expenses related to HP Labs was flat as compared to fiscal 2007.

Corporate Investments

        Net revenue in Corporate Investments relates to network infrastructure products sold under the brand "ProCurve Networking." For the three and six months ended April 30, 2009, revenue from network infrastructure products decreased 18.7% and 14.6%, respectively, compared to the same periods in fiscal 2008 resulting from the economic slowdown and the decreased sales of enterprise class gigabit and 10/100 Ethernet switch products. Partially offsetting the revenue declines were revenues resulting from the acquisition of Colubris Networks, Inc., which HP acquired in October 2008.

        Corporate Investments reported losses from operations for the second quarter and first half of fiscal 2009 as compared to the positive earnings from operations reported for the same periods in fiscal 2008 due primarily to lower earnings from operations generated by network infrastructure products. The loss from operations for both periods was also impacted by expenses carried in the segment

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associated with corporate development, global alliances and HP Labs, which declined from the prior-year periods.

Corporate Investments

        The majority of net revenue in Corporate Investments relates to network infrastructure products sold under the brand "ProCurve Networking." For the three months ended January 31, 2009, revenue from network infrastructure products decreased 10% compared to the same period in fiscal 2008 as a result of decreased sales of enterprise class gigabit and 10/100 Ethernet switch products. Partially offsetting the revenue decline were revenues resulting from the acquisition of Colubris Networks, Inc., which HP acquired in October 2008.

        Corporate Investments reported a loss from operations for the first three months of fiscal 2009 as compared to the positive earnings from operations reported for the same period in fiscal 2008 due primarily to lower earnings from operations generated by network infrastructure products and higher expenses due primarily to integration costs from the Colubris acquisition, increased investments in R&D, and the expenses associated with corporate development, global alliances and HP Labs that are carried in the segment.

Corporate Investments

        The majority of the net revenue in Corporate Investments relates to network infrastructure products sold under the brand "ProCurve Networking." In fiscal 2008, revenue from network infrastructure products increased 26% compared to the same period in fiscal 2007 as the result of continued increased sales of enterprise class gigabit and 10 gigabit Ethernet switch products. Fiscal 2008 network infrastructure revenue includes a small amount of revenue from Colubris Networks, Inc., a company that HP acquired on October 1, 2008.

        Corporate Investments reported earnings from operations in fiscal 2008 compared to losses in fiscal 2007 due primarily to increased earnings from operations generated by network infrastructure products and lower expenses related to HP Labs.

        In fiscal 2007, the majority of the net revenue in Corporate Investments related to network infrastructure products, which grew 33% from fiscal 2006 as new product introductions continued to drive increased sales of enterprise class gigabit Ethernet switch products.

        Corporate Investments loss from operations in fiscal 2007 was due primarily to expenses associated with corporate development, global alliances and HP Labs that are carried in the segment. The year-over-year decrease in operating losses was driven primarily by higher earnings from operations generated by network infrastructure products.

Corporate Investments

        The
majority of the net revenue in Corporate Investments relates to network infrastructure products sold under the brand "ProCurve Networking." In fiscal 2008, revenue from network
infrastructure products increased 26% compared to the same period in fiscal 2007 as the result of continued increased sales of enterprise class gigabit and 10 gigabit Ethernet switch products. Fiscal
2008 network infrastructure revenue includes a small amount of revenue from Colubris Networks, Inc., a company that HP acquired on October 1, 2008.

        Corporate
Investments reported earnings from operations in fiscal 2008 compared to losses in fiscal 2007 due primarily to increased earnings from operations generated by network
infrastructure products and lower expenses related to HP Labs.

        In
fiscal 2007, the majority of the net revenue in Corporate Investments related to network infrastructure products, which grew 33% from fiscal 2006 as new product introductions
continued to drive increased sales of enterprise class gigabit Ethernet switch products.

        Corporate
Investments loss from operations in fiscal 2007 was due primarily to expenses associated with corporate development, global alliances and HP Labs that are carried in the
segment. The year-over-year decrease in operating losses was driven primarily by higher earnings from operations generated by network infrastructure products.

Corporate Investments

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        The majority of the net revenue in Corporate Investments relates to network infrastructure products sold under the brand "ProCurve Networking." For the three and nine months ended July 31, 2008, revenue from network infrastructure products increased 23% and 30%, respectively, compared to the same periods in fiscal 2007 as the result of continued increased sales of enterprise class gigabit and 10 gigabit Ethernet switch products.

        Corporate Investments reported earnings from operations for the third quarter and first nine months of fiscal 2008 compared to losses in the same periods in fiscal 2007 due primarily to strong earnings from operations generated by network infrastructure products and lower expenses related to HP Labs.

Corporate Investments

        The majority of the net revenue in Corporate Investments relates to network infrastructure products sold under the brand "ProCurve Networking." For the three and six months ended April 30, 2008, revenue from network infrastructure products increased 31% and 35%, respectively, compared to the same periods in fiscal 2007 as the result of continued increased sales of enterprise class gigabit and 10 gigabit Ethernet switch products.

        Corporate Investments reported earnings from operations for the second quarter and first half of fiscal 2008 compared to losses in the same periods in fiscal 2007 due primarily to strong earnings from operations generated by network infrastructure products and lower expenses related to corporate development, global alliances and HP Labs.

Corporate Investments

        The majority of the revenue in Corporate Investments relates to network infrastructure products sold under the brand "ProCurve Networking". For the three months ended January 31, 2008, net revenue from network infrastructure products increased 38% compared to the same period in fiscal 2007 as a result of continued increased sales of enterprise class gigabit and 10 gigabit ethernet switch products.

        Earnings from operations for the first quarter of fiscal 2008 increased $37 million from the same period in fiscal 2007 due primarily to strong earnings from network infrastructure products. Expenses related to corporate development, global alliances and HP Labs remained relatively flat compared to the same period in the prior fiscal year.

Corporate Investments

        The majority of the net revenue in Corporate Investments relates to network infrastructure products sold under the brand "ProCurve Networking." In fiscal 2007, revenue from network infrastructure products increased 33% compared to the same period in fiscal 2006 as new product introductions continued to drive increased sales of enterprise class gigabit Ethernet switch products.

        Corporate Investments' loss from operations in fiscal 2007 was due primarily to expenses associated with corporate development, global alliances and HP Labs that are carried in the segment.

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The year-over-year decrease in operating losses was driven primarily by higher earnings from operations generated by network infrastructure products.

        In fiscal 2006, the majority of the net revenue in Corporate Investments related to network infrastructure products, which grew 8% from fiscal 2005 as a result of increased sales of gigabit Ethernet switch products.

        Corporate Investments' loss from operations in fiscal 2006 decreased compared to fiscal 2005 due primarily to lower operating expenses related to global alliances and HP Labs and higher gross profits from network infrastructure products. The decrease in operating expenses was due primarily to savings resulting from restructuring actions and lower program spending. Expenses related to global alliances and HP Labs contributed to the majority of the loss from operations.

Corporate Investments

        The majority of the net revenue in Corporate Investments relates to network infrastructure products sold under the brand "ProCurve Networking." For the three and nine months ended July 31, 2007, revenue from network infrastructure products increased 38% and 34%, respectively, compared to the same periods in fiscal 2006, which reflected continued increased sales of enterprise class gigabit Ethernet switch products.

        Corporate Investments' loss from operations for the three and nine months ended July 31, 2007 was due primarily to expenses associated with corporate development, global alliances and HP Labs. The year-over-year decrease in operating losses was driven primarily by higher earnings from operations generated by network infrastructure products.

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Corporate Investments

        The majority of the net revenue in Corporate Investments relates to network infrastructure products sold under the brand "ProCurve Networking." For the three and six months ended April 30, 2007, revenue from network infrastructure products increased 43% and 32%, respectively, compared to the same periods in fiscal 2006 as the result of continued increased sales of enterprise class gigabit Ethernet switch products.

        Corporate Investments' loss from operations for the second quarter and first half of fiscal 2007 was due to expenses related to corporate development, global alliances and HP Labs. Such losses were partially offset by higher earnings from operations generated by network infrastructure products.

Corporate Investments

For the three months ended January 31, 2007, the majority of the net revenue in Corporate Investments related to network infrastructure products, which increased 21% compared to the same period in fiscal 2006 as a result of continued increased sales of gigabit Ethernet switch products sold under the brand “ProCurve Networking.”

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Corporate Investments’ loss from operations for the first quarter of fiscal 2007 decreased from the same period in the prior fiscal year due primarily to an increase in operating profit in network infrastructure products as the result of higher sales. Expenses related to corporate development, global alliances and HP Labs contributed to the majority of the loss from operations. Such loss was offset in part by operating profit from network infrastructure product sales.