Hewlett-Packard (HPQ)

Equity price risk

        We are also exposed to equity price risk inherent in our portfolio of publicly-traded equity securities, which had an estimated fair value of $5 million at October 31, 2009 and $5 million at October 31, 2008. We monitor our equity investments for impairment on a periodic basis. Generally, we do not attempt to reduce or eliminate our market exposure on these equity securities. However, we may use derivative transactions to hedge certain positions from time to time. We do not purchase our equity securities with the intent to use them for speculative purposes. A hypothetical 30% adverse change in the stock prices of our publicly-traded equity securities would result in a loss in the fair values of our marketable equity securities of $1 million at October 31, 2009 and $2 million at October 31, 2008. The aggregate cost of privately-held companies, marketable trading securities and other investments was $142 million at October 31, 2009 and $425 million at October 31, 2008.

75

Table of Contents

ITEM 8. Financial Statements and Supplementary Data.

Table of Contents

76

Table of Contents

Report of Independent Registered Public Accounting Firm

Equity price risk

        We are also exposed to equity price risk inherent in our portfolio of publicly-traded equity securities, which had an estimated fair value of $5 million at October 31, 2008 and $9 million at October 31, 2007. We monitor our equity investments for impairment on a periodic basis. In the event that the carrying value of the equity investment exceeds its fair value, and we determine the decline in value to be other than temporary, we reduce the carrying value to its current fair value. Generally, we do not attempt to reduce or eliminate our market exposure on these equity securities. However, we may use derivative transactions to hedge certain positions from time to time. We do not purchase our equity securities with the intent to use them for speculative purposes. A hypothetical 30% adverse change in the stock prices of our publicly-traded equity securities would result in a loss in the fair values of our marketable equity securities of $2 million at October 31, 2008 and $3 million at October 31, 2007. The aggregate cost of privately-held companies, marketable trading securities and other investments was $425 million at October 31, 2008 and $533 million at October 31, 2007.

75

Table of Contents

ITEM 8. Financial Statements and Supplementary Data.

Table of Contents

76

Table of Contents

Report of Independent Registered Public Accounting Firm

Equity price risk

        We are also exposed to equity price risk inherent in our portfolio of publicly-traded equity securities, which had an estimated fair
value of $5 million at October 31, 2008 and $9 million at October 31, 2007. We monitor our equity investments for impairment on a periodic basis. In the event that the
carrying value of the equity investment exceeds its fair value, and we determine the decline in value to be other than temporary, we reduce the carrying value to its current fair value. Generally, we
do not attempt to reduce or eliminate our market exposure on these equity securities. However, we may use derivative transactions to hedge certain positions from time to time. We do not purchase our
equity securities with the intent to use them for speculative purposes. A hypothetical 30%
adverse change in the stock prices of our publicly-traded equity securities would result in a loss in the fair values of our marketable equity securities of $2 million at October 31,
2008 and $3 million at October 31, 2007. The aggregate cost of privately-held companies, marketable trading securities and other investments was $425 million at
October 31, 2008 and $533 million at October 31, 2007.

75

NAME="page_fa72001_1_76">

Table of Contents

NAME="fa72001_item_8._financial_statements_and_supplementary_data.">

ITEM 8. Financial Statements and Supplementary Data.

NAME="fa72001_table_of_contents">

Table of Contents

76

NAME="page_fc72001_1_77">

Table of Contents

NAME="fc72001_report_of_independent___fc702274">


Report of Independent Registered Public Accounting Firm

Equity price risk

        We are also exposed to equity price risk inherent in our portfolio of publicly-traded equity securities, which had an estimated fair value of $9 million at October 31, 2007 and $36 million at October 31, 2006. We monitor our equity investments for impairment on a periodic basis. In the event that the carrying value of the equity investment exceeds its fair value, and we determine the decline in value to be other than temporary, we reduce the carrying value to its current fair value. Generally, we do not attempt to reduce or eliminate our market exposure on these equity securities. However, we may use derivative transactions to hedge certain positions from time to time. We do not purchase our equity securities with the intent to use them for speculative purposes. A hypothetical 30% adverse change in the stock prices of our publicly-traded equity securities would result in a loss in the fair values of our marketable equity securities of $3 million at October 31, 2007 and $11 million at October 31, 2006. The aggregate cost of privately-held companies and other investments was $533 million at October 31, 2007 and $362 million at October 31, 2006.

70

ITEM 8. Financial Statements and Supplementary Data.

Table of Contents

71

Report of Independent Registered Public Accounting Firm

Equity price risk

        We are also exposed to equity price risk inherent in our portfolio of publicly-traded equity securities, which had an estimated fair value of $36 million at October 31, 2006 and $64 million at October 31, 2005. We monitor our equity investments for impairment on a periodic basis. In the event that the carrying value of the equity investment exceeds its fair value, and we determine the decline in value to be other than temporary, we reduce the carrying value to its current fair value. Generally, we do not attempt to reduce or eliminate our market exposure on these equity securities. However, we may use derivative transactions to hedge certain positions from time to time. We do not purchase our equity securities with the intent to use them for trading or speculative purposes. A hypothetical 30% adverse change in the stock prices of our publicly-traded equity securities would result in a loss in the fair values of our marketable equity securities of $11 million at October 31, 2006 and $19 million at October 31, 2005. The aggregate cost of privately-held companies and other investments is $362 million at October 31, 2006 and $353 million at October 31, 2005.

69

ITEM 8. Financial Statements and Supplementary Data.

Table of Contents

70

Report of Independent Registered Public Accounting Firm

Equity price risk

        We also are exposed to equity price risk inherent in our portfolio of publicly-traded equity securities, which had an estimated fair value of $64 million at October 31, 2005 and $70 million at October 31, 2004. We monitor our equity investments for impairment on a periodic basis. In the event that the carrying value of the equity investment exceeds its fair value, and we determine the decline in value to be other than temporary, we reduce the carrying value to its current fair value. Generally, we do not attempt to reduce or eliminate our market exposure on these equity securities. However, we may use derivative transactions to hedge certain positions from time to time. We do not purchase our equity securities with the intent to use them for trading or speculative purposes. A hypothetical 30% adverse change in the stock prices of our publicly-traded equity securities would result in a loss in the fair values of our marketable equity securities of $19 million at October 31, 2005 and $21 million at October 31, 2004. The aggregate cost of privately-held companies and other investments is $353 million at October 31, 2005 and $388 million at October 31, 2004.

66

ITEM 8. Financial Statements and Supplementary Data.

TABLE OF CONTENTS

67

Report of Independent Registered Public Accounting Firm

Equity price risk

        During the preceding fiscal year, we also were exposed to equity price risk inherent in our portfolio of publicly-traded equity securities, which had an estimated fair value of $70 million at October 31, 2004 and $97 million at October 31, 2003. We monitor our equity investments on a periodic basis. In the event that the carrying value of the equity investment exceeds its fair value, and the decline in value is determined to be other-than temporary, the carrying value is reduced to its current fair value. Generally, we do not attempt to reduce or eliminate our market exposure on these equity securities. However, we may use derivative transactions to hedge certain positions from time to time. We do not purchase our equity securities with the intent to use them for trading or speculative purposes. A hypothetical 30% adverse change in the stock prices of our publicly-traded equity securities would result in a loss in the fair values of our marketable equity securities of $21 million at October 31, 2004 and $29 million at October 31, 2003. The aggregate cost of privately-held companies and other investments is $388 million at October 31, 2004 and $577 million at October 31, 2003.

        Actual gains and losses in the future may differ materially from the sensitivity analyses based on changes in the timing and amount of interest rate, foreign currency exchange rate and equity price movements and our actual exposures and hedges.

81

ITEM 8. Financial Statements and Supplementary Data.

TABLE OF CONTENTS

82

Report of Independent Registered Public Accounting Firm