Hewlett-Packard (HPQ)

Net Revenue

        The components of the weighted net revenue change from the prior-year period were as follows:

        For the three months ended January 31, 2010, net revenue increased 8.2% from the prior-year period (5.4% on a constant currency basis). The PSG segment was the largest contributor to HP net revenue growth as a result of balanced growth across each of the PSG product categories with particular strength in consumer demand. U.S. net revenue increased 7.8% to $10.9 billion for the first quarter of fiscal 2010 as compared to the prior-year period, while net revenue from outside of the United States increased 8.4% to $20.3 billion.

        The PSG net revenue increase for the three months ended January 31, 2010 was primarily the result of a recovering U.S. PC market, combined with continued strength in China and other emerging markets. PSG unit volumes and net revenue increased across all business units except in our handhelds

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business unit. Offsetting net revenue performance was a decline in average selling prices (ASPs) as a result of competitive pricing pressures.

        ESS net revenue increased for the three months ended January 31, 2010 driven by volume growth in our industry standard servers ("ISS") business unit in part as a result of the latest generation of ISS products. Net revenue declined in the storage and business critical systems business units.

        IPG net revenue increased for the three months ended January 31, 2010 in the commercial and consumer hardware business units and the supplies business unit. Both the consumer and commercial hardware business units experienced unit volume increases in response to improved printer market demand.

        HPFS net revenue increased for the three months ended January 31, 2010 due primarily to portfolio growth and favorable currency movements, the effect of which was partially offset by lower levels of remarketing sales and buyout activities.

        HP Software net revenue growth was flat for the three months ended January 31, 2010 due primarily to continued softness in enterprise spending. Revenue from licenses and support increased, the effect of which was offset by a decrease in services revenue.

        The net revenue decrease in Services for the three months ended January 31, 2010 was due primarily to net revenue declines in the application services, technology services and business process outsourcing business units. Those declines were due primarily to weak market conditions, reduced demand for technology support services as a result of reduced sales of enterprise hardware in the prior-year period, and existing contract completion. Net revenue in infrastructure technology outsourcing increased due to favorable currency impacts and new business.

        Net revenue in Corporate Investments and Other increased for the three months ended January 31, 2010, primarily resulting from increased sales of network infrastructure products.

Net Revenue

        The components of the weighted net revenue change from the prior-year period were as follows for the following fiscal years ended October 31:

Fiscal 2009

        In fiscal 2009, the global slowdown of IT and consumer spending impacted each of our segments. Net revenue decreased 3.2% in fiscal 2009 from fiscal 2008 (increased 1.3% on a constant currency basis). The unfavorable currency impact for fiscal 2009 was due primarily to the movement of the dollar against the euro. For fiscal 2009, the Services segment contributed favorably to the total HP net revenue change primarily as a result of the EDS acquisition. U.S. net revenue increased 12% to $41.3 billion for fiscal 2009 as compared to fiscal 2008, while net revenue from outside of the United States decreased 10% to $73.2 billion. The increase in U.S. net revenue in fiscal 2009 from fiscal 2008 was primarily a result of the acquisition of EDS.

        The PSG net revenue decline in fiscal 2009 from fiscal 2008 was primarily the result of the overall slowdown in the global economy. PSG average selling prices ("ASPs") declined in both consumer clients and commercial clients. The ASP decline in fiscal 2009 was offset slightly by an increase in the option and monitor attach rates. PSG unit volumes, however, increased slightly in fiscal 2009 as compared to fiscal 2008.

        IPG experienced net revenue declines in fiscal 2009 from fiscal 2008 in the commercial and consumer hardware business units and in the supplies business unit. Unit volume declines across each of the business units were a result of the softness in both the business and consumer demand environments.

        ESS net revenue decreased in fiscal 2009 from fiscal 2008 driven by declines in our industry standard servers ("ISS"), business critical systems and storage business units. The revenue declines were due primarily to the economic slowdown and overall weak demand environment. ISS unit volumes and average unit prices declined in fiscal 2009 as compared to the prior year.

        HP Software experienced net revenue declines in fiscal 2009 from fiscal 2008 in both the business technology optimization ("BTO") business unit and the other software business unit due primarily to revenue declines in licenses and services, the effect of which was partially offset by increased support revenue as a result of renewal rate increases.

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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)

        Net revenue in Corporate Investments and Other declined in fiscal 2009 from fiscal 2008, resulting from lower sales of network infrastructure products primarily as a result of the slowdown in the networking market.

        HPFS net revenue decreased in fiscal 2009 from fiscal 2008 due to unfavorable currency movements.

        The net revenue increase in Services in fiscal 2009 from fiscal 2008 was due primarily to net revenue increases in infrastructure technology outsourcing, application services and business process outsourcing primarily as a result of the EDS acquisition in the fourth quarter of fiscal 2008, the effect of which was partially offset by unfavorable currency impacts and a decline in spending from existing customers. Net revenue in technology services declined in fiscal 2009 due primarily to unfavorable currency impacts and weak economic conditions, the effect of which was partially offset by growth in extended warranty.

Fiscal 2008

        In fiscal 2008, HP net revenue increased approximately 13.5% from the prior-year period (8.4% on a constant currency basis). The favorable currency impact for fiscal 2008 was due primarily to the movement of the dollar against the euro. U.S. net revenue was $36.9 billion for fiscal 2008, an increase of 6% from the prior year, while international net revenue increased 17% to $81.4 billion.

        PSG net revenue increased in fiscal 2008 from fiscal 2007 as a result of a unit volume increase of 22%. The unit volume increase was the result of strong growth in notebooks with continued strength in emerging markets. The positive revenue impact from this unit volume increase was moderated by declines in ASPs in commercial and consumer clients of 7% and 4%, respectively.

        IPG net revenue increased in fiscal 2008 from fiscal 2007 due to the growth in supplies net revenue as a result of higher unit volumes with strong performance from color-related products. For fiscal 2008, commercial hardware net revenues increased slightly, while consumer hardware net revenues declined due primarily to competitive pricing pressures and a slowing economy.

        ESS net revenue increased in fiscal 2008 over the prior-year period due primarily to strong performance in storage, which was due in part to growth within our EVA and MSA product lines, and revenue growth in industry standard servers from increased unit volumes and blade revenues. Fiscal 2008 revenues in business critical systems were flat compared to the prior-year period.

        HP Software net revenue growth in fiscal 2008 from fiscal 2007 was attributable to strong growth in our BTO business unit resulting from revenue increases in support, growth in license revenue, partially as a result of our acquisition of Opsware Inc. ("Opsware") in September 2007, and, to a lesser extent, increased services contract sales.

        HPFS net revenue increased in fiscal 2008 from the prior year due primarily to an increase in the mix of operating leases as a portion of our asset portfolio and growth in average portfolio assets.

        Services net revenue increased in fiscal 2008 over the prior year due primarily to net revenue increases in technology services, infrastructure technology outsourcing, application services and business process outsourcing primarily as a result of the EDS acquisition on August 26, 2008.

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HEWLETT-PACKARD COMPANY AND SUBSIDIARIES

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

Net Revenue

        The components of the weighted net revenue decline as compared to the prior-year periods were as follows:

        For the three and six months ended April 30, 2009, the global slowdown of IT and consumer spending continued to impact our segments. Net revenue decreased 3.2% for the three months ended April 30, 2009 from the prior-year comparable period (increased 2.8% on a constant currency basis), and decreased 1.0% for the first six months of fiscal 2009 from the prior-year comparable period (increased 3.5% on a constant currency basis). For both periods, the Services segment contributed favorably to the total HP net revenue change primarily as a result of the EDS acquisition. U.S. net revenue increased 17% to $9.9 billion for the second quarter of fiscal 2009, while net revenue from

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outside of the United States decreased 12% to $17.5 billion. U.S. net revenue increased 16% to $19.9 billion for the first half of fiscal 2009, while net revenue from outside of the United States decreased 8% to $36.2 billion. The increase in U.S. net revenue for both periods was primarily a result of the acquisition of EDS.

        The PSG net revenue decline in the three and six months ended April 30, 2009 was primarily the result of the overall slowdown in the global economy. PSG unit volumes were approximately flat for the second quarter of fiscal 2009 and declined by 2% for the first half of fiscal 2009, and average selling prices ("ASPs") declined in both consumer clients and in commercial clients in those periods.

        For the three and six months ended April 30, 2009, IPG experienced net revenue declines in the commercial and consumer hardware business units and the supplies business unit. Unit volume declines across each of the business units were a result of the softness in both the business and consumer demand environments.

        The net revenue decline in ESS for the three and six months ended April 30, 2009 was driven by declines in industry standard servers, business critical systems and storage. The revenue declines were due primarily to the economic slowdown and the overall weak demand environment. For the second quarter and first half of fiscal 2009, industry standard servers experienced both unit volume and average unit price declines and was the largest business unit contributor to the decline in ESS revenue.

        For the three and six months ended April 30, 2009, HP Software experienced net revenue declines in both the Business Technology Optimization ("BTO") and the other software business unit due primarily to revenue declines in licenses and services, the effect of which was partially offset by increases in support revenue.

        The HPFS net revenue decrease for the three and six months ended April 30, 2009 was due to unfavorable currency movements.

        The net revenue increase in Services in the three and six months ended April 30, 2009 was due primarily to revenue increases in infrastructure technology outsourcing, application services and business process outsourcing primarily as a result of our acquisition of EDS in the fourth quarter of fiscal 2008. Net revenue in technology services declined for both periods due primarily to unfavorable currency impacts, the effect of which was partially offset by growth in extended warranty.

        Net revenue in Corporate Investments and Other declined in the second quarter and first six months of fiscal 2009 primarily as a result of a decline in sales of network infrastructure products as a result of the slowing IT spend environment.

Net Revenue

        The components of weighted-average net revenue growth as compared to prior-year periods were as follows for the following fiscal years ended October 31:

        In fiscal 2008, HP net revenue increased approximately 13% from the prior-year period (8% on a constant currency basis). The favorable currency impact for fiscal 2008 was due primarily to the

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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)

movement of the dollar against the euro. U.S. net revenue was $36.9 billion for fiscal 2008, an increase of 6% from the prior year, while international net revenue increased 17% to $81.4 billion.

        PSG net revenue increased in fiscal 2008 from fiscal 2007 as a result of a unit volume increase of 22%. The unit volume increase was the result of strong growth in notebooks with continued strength in emerging markets. The positive revenue impact from this unit volume increase was moderated by declines in average selling prices ("ASPs") in commercial and consumer clients of 7% and 4%, respectively.

        HPS net revenue increased in fiscal 2008 over the prior year due primarily to the acquisition of EDS on August 26, 2008. HPS net revenue, excluding EDS, also increased in fiscal 2008 from fiscal 2007 as a result of revenue growth in technology services primarily from IT solution support services, existing account growth in outsourcing services and base business growth in our consulting and integration business unit.

        IPG net revenue increased in fiscal 2008 from fiscal 2007 due to the growth in supplies net revenue as a result of higher unit volumes with strong performance from color-related products. For fiscal 2008, commercial and consumer hardware net revenues declined due primarily to competitive pricing pressures and a slowing economy.

        ESS net revenue increased in fiscal 2008 over the prior-year period due primarily to strong performance in storage, which was due in part to growth within our EVA and MSA product lines, and revenue growth in industry standard servers from increased unit volumes and blade revenues. Fiscal 2008 revenues in business critical systems were flat compared to the prior-year period.

        HP Software net revenue growth in fiscal 2008 from fiscal 2007 was attributable to strong growth in our business technology optimization ("BTO") business unit resulting from revenue increases in support, growth in license revenue, partially as a result of our acquisition of Opsware Inc. ("Opsware") in September 2007, and, to a lesser extent, increased services contract sales.

        HPFS net revenue increased in fiscal 2008 from the prior year due primarily to an increase in the mix of operating leases as a portion of our asset portfolio and growth in average portfolio assets.

        In fiscal 2007, HP net revenue increased approximately 14% from the prior-year period (10% on a constant currency basis). The favorable currency impact for fiscal 2007 was due primarily to the movement of the dollar against the euro. U.S. net revenue was $34.8 billion for fiscal 2007, an increase of 8% from the prior year, while international net revenue increased 17% to $69.5 billion.

        PSG had double-digit net revenue growth in fiscal 2007 across all regions as a result of overall unit volume increases of 28%. The unit volume increases resulted from strong growth in notebooks with significant improvements in emerging markets. The impact of these increases was partially offset by declines in ASPs in commercial and consumer clients of 5% and 1%, respectively.

        HPS net revenue during fiscal 2007 increased due primarily to favorable currency impacts, revenue increases in outsourcing services driven by existing accounts growth and new business, and revenue increases in consulting and integration associated with acquisitions made in fiscal 2007.

        IPG net revenue growth in fiscal 2007 was due mainly to increased unit volumes of printer supplies resulting from the continued expansion of printer hardware placements and the strong performance of supplies for color-related products.

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HEWLETT-PACKARD COMPANY AND SUBSIDIARIES

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

        ESS net revenue growth during fiscal 2007 was the result primarily of strong blade revenue and unit growth in our industry standard servers business, increased option attach rates in our ProLiant server line, continued strong performance in mid-range EVA products, growth in commercial storage area networks and revenue increases from our Integrity servers. The ESS growth was partially moderated by the revenue declines in our tape business, high-end arrays and our PA-RISC and Alpha server product lines during fiscal 2007.

        The net revenue growth in HP Software during fiscal 2007 was due primarily to growth in our BTO business as a result of the acquisition of Mercury Interactive Corporation ("Mercury") and increases in revenue from license and support contracts.

        The HPFS net revenue increase during fiscal 2007 was due primarily to operating lease growth and higher end-of-lease activity.

Net Revenue

        The components of weighted-average net revenue growth as compared to prior-year periods were as follows for the following
fiscal years ended October 31:

        In
fiscal 2008, HP net revenue increased approximately 13% from the prior-year period (8% on a constant currency basis). The favorable currency impact for fiscal 2008 was due primarily
to the

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HEWLETT-PACKARD COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

movement
of the dollar against the euro. U.S. net revenue was $36.9 billion for fiscal 2008, an increase of 6% from the prior year, while international net revenue increased 17% to
$81.4 billion.

        PSG
net revenue increased in fiscal 2008 from fiscal 2007 as a result of a unit volume increase of 22%. The unit volume increase was the result of strong growth in notebooks with
continued strength in emerging markets. The positive revenue impact from this unit volume increase was moderated by declines in average selling prices ("ASPs") in commercial and consumer clients of 7%
and 4%, respectively.

        HPS
net revenue increased in fiscal 2008 over the prior year due primarily to the acquisition of EDS on August 26, 2008. HPS net revenue, excluding EDS, also increased in fiscal
2008 from fiscal 2007 as a result of revenue growth in technology services primarily from IT solution support services, existing account growth in outsourcing services and base business growth in our
consulting and integration business unit.

        IPG
net revenue increased in fiscal 2008 from fiscal 2007 due to the growth in supplies net revenue as a result of higher unit volumes with strong performance from color-related
products. For fiscal 2008, commercial and consumer hardware net revenues declined due primarily to competitive pricing pressures and a slowing economy.

        ESS
net revenue increased in fiscal 2008 over the prior-year period due primarily to strong performance in storage, which was due in part to growth within our EVA and MSA
product lines, and revenue growth in industry standard servers from increased unit volumes and blade revenues. Fiscal 2008 revenues in business critical systems were flat compared to the
prior-year period.

        HP
Software net revenue growth in fiscal 2008 from fiscal 2007 was attributable to strong growth in our business technology optimization ("BTO") business unit resulting from revenue
increases in support, growth in license revenue, partially as a result of our acquisition of Opsware Inc. ("Opsware") in September 2007, and, to a lesser extent, increased services contract
sales.

        HPFS
net revenue increased in fiscal 2008 from the prior year due primarily to an increase in the mix of operating leases as a portion of our asset portfolio and growth in average
portfolio assets.

        In
fiscal 2007, HP net revenue increased approximately 14% from the prior-year period (10% on a constant currency basis). The favorable currency impact for fiscal 2007 was due primarily
to the movement of the dollar against the euro. U.S. net revenue was $34.8 billion for fiscal 2007, an increase of 8% from the prior year, while international net revenue increased 17% to
$69.5 billion.

        PSG
had double-digit net revenue growth in fiscal 2007 across all regions as a result of overall unit volume increases of 28%. The unit volume increases resulted from strong growth in
notebooks with
significant improvements in emerging markets. The impact of these increases was partially offset by declines in ASPs in commercial and consumer clients of 5% and 1%, respectively.

        HPS
net revenue during fiscal 2007 increased due primarily to favorable currency impacts, revenue increases in outsourcing services driven by existing accounts growth and new business,
and revenue increases in consulting and integration associated with acquisitions made in fiscal 2007.

        IPG
net revenue growth in fiscal 2007 was due mainly to increased unit volumes of printer supplies resulting from the continued expansion of printer hardware placements and the strong
performance of supplies for color-related products.

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HEWLETT-PACKARD COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

        ESS
net revenue growth during fiscal 2007 was the result primarily of strong blade revenue and unit growth in our industry standard servers business, increased option attach rates in our
ProLiant server line, continued strong performance in mid-range EVA products, growth in commercial storage area networks and revenue increases from our Integrity servers. The ESS growth
was partially moderated by the revenue declines in our tape business, high-end arrays and our PA-RISC and Alpha server product lines during fiscal 2007.

        The
net revenue growth in HP Software during fiscal 2007 was due primarily to growth in our BTO business as a result of the acquisition of Mercury Interactive Corporation ("Mercury") and
increases in revenue from license and support contracts.

        The
HPFS net revenue increase during fiscal 2007 was due primarily to operating lease growth and higher end-of-lease activity.

Net Revenue

        The components of weighted-average net revenue growth as compared to the prior-year periods were as follows:

        For the three and nine months ended July 31, 2008, net revenue increased 10.5% and 11.5%, respectively, from the prior-year comparable periods and increased 4.7% and 5.7%, respectively, on a constant currency basis. The favorable currency impact was due primarily to the movement of the dollar against the euro for all our major business segments. U.S. net revenue increased 2% to $8.9 billion for the third quarter of fiscal 2008, while international net revenue increased 15% to $19.1 billion. U.S. net revenue increased 2% to $26.1 billion for the first nine months of fiscal 2008, while international net revenue increased 16% to $58.7 billion.

        PSG net revenue increased in the third quarter and first nine months of fiscal 2008 as a result of unit volume increases of 20% and 23%, respectively. The unit volume increases were the result of strong growth in notebooks, with continued strength in emerging markets. The increases were partially

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offset by declines in average selling prices ("ASPs") in consumer clients and commercial clients of 3% and 7%, respectively, in the third quarter of fiscal 2008 and by 2% and 6%, respectively, in the first nine months of fiscal 2008 as compared to the prior-year periods.

        HPS net revenue in the third quarter and first nine months of fiscal 2008 increased due primarily to favorable currency impacts, revenue increases in technology services due to growth in extended warranty revenue and IT solution support services, revenue increases in outsourcing services driven by existing accounts growth and new business, and revenue increases in consulting and integration associated with base business growth.

        IPG net revenue growth in the third quarter and the first nine months of fiscal 2008 was due primarily to favorable currency impacts and revenue increases in printer supplies as a result of higher unit volumes of supplies. For the third quarter of fiscal 2008, net revenue in commercial and consumer hardware declined. For the first nine months of fiscal 2008, commercial hardware net revenue increased while net revenue in consumer hardware declined.

        ESS net revenue growth in the third quarter and first nine months of fiscal 2008 was the result primarily of favorable currency impacts, strong growth in blade revenue in our industry standard servers business, strong performance in mid-range EVA and entry MSA storage products, and revenue increases from our Integrity servers. The ESS growth was moderated by revenue declines in the PA-RISC product line and the planned phase-out of our Alpha Server product line.

        The net revenue growth in HP Software for the three and nine months ended July 31, 2008 was due primarily to growth in business technology optimization ("BTO"), due in part to our acquisition of Opsware Inc. ("Opsware") in September 2007; increases in support and services contracts; and increases in license revenue.

        The HPFS net revenue increases for the three and nine months ended July 31, 2008 were due primarily to portfolio growth, increased operating lease mix, higher end-of-lease activity, buyouts and used equipment sales.

Net Revenue

        The components of weighted-average net revenue growth as compared to the prior-year periods were as follows:

        For the three and six months ended April 30, 2008, net revenue increased 10.7% and 12.1%, respectively, from the prior year comparable periods and increased 4.5% and 6.4%, respectively, on a constant currency basis. The favorable currency impact was due primarily to the movement of the dollar against the euro for all our major business segments. U.S. net revenue decreased 1% to $8.5 billion for the second quarter of fiscal 2008, while international net revenue increased 16% to $19.8 billion. U.S. net revenue increased 3% to $17.1 billion for the first half of fiscal 2008, while international net revenue increased 17% to $39.6 billion.

        PSG net revenue increased in the second quarter and first six months of fiscal 2008 as a result of unit volume increases of 21% and 24%, respectively. The unit volume increases were the result of strong growth in notebooks, with continued strength in emerging markets. The increases were partially

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offset by declines in average selling prices ("ASPs") in consumer clients and commercial clients of 2% and 6%, respectively, for both the second quarter and the first six months of fiscal 2008.

        HPS net revenue in the second quarter and first half of fiscal 2008 increased due primarily to favorable currency impacts, revenue increases in technology services due to growth in extended warranty revenue and IT solution support services, revenue increases in outsourcing services driven by existing accounts growth and new business, and revenue increases in consulting and integration associated with recent acquisitions.

        IPG net revenue growth in the second quarter and first six months of fiscal 2008 was due primarily to favorable currency impacts, as well as increased unit volumes of printer supplies resulting from the continued expansion of printer hardware placements and the strong performance of color-related products.

        ESS net revenue growth in the second quarter and first half of fiscal 2008 was the result primarily of strong growth in blade revenue in our industry standard servers business, strong performance in mid-range EVA and XP products, and revenue increases from our Integrity servers. The ESS growth was moderated by revenue declines in the PA-RISC product line, the planned phase out of our Alpha Server product line and revenue declines in rack and tower servers.

        The net revenue growth in HP Software for the three and six months ended April 30, 2008 was due primarily to growth in business technology optimization as a result of our acquisition of Opsware Inc. ("Opsware") in September 2007 and increases in revenue from licenses and support and services contracts.

        The HPFS net revenue increase for the three and six months ended April 30, 2008 was due primarily to portfolio growth, increased operating lease mix, higher end-of-lease activity and equipment sales.

Net Revenue

        The components of weighted-average net revenue growth as compared to prior-year period were as follows:

        For the three months ended January 31, 2008, net revenue increased 13.5% from the prior-year comparable period (8% on a constant currency basis). The favorable currency impact was due primarily to the movement of the dollar against the euro. U.S. net revenue increased 6% to $8.7 billion, while international net revenue increased 17% to $19.7 billion. PSG had double-digit net revenue growth across all regions as a result of a 27% unit volume increase. The unit volume increase resulted from strong growth in notebooks and emerging markets, which was partially offset by declines of 2% and 6% in average selling prices ("ASPs") in consumer and commercial clients, respectively. HPS net revenue

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increased due primarily to favorable currency impacts, revenue increases in technology services due primarily to growth in extended warranty revenue and IT solution support services, revenue increases in outsourcing services driven by existing account growth and new business and revenue increases in consulting and integration due to additional revenue from recent acquisitions. ESS net revenue growth was the result primarily of strong blade revenue and unit growth, increased option attach rates in our ProLiant server line, continued strong performance in mid-range EVA products within our storage business and revenue increases from our Integrity servers. The ESS growth was moderated by revenue declines in our PA-RISC product line and the planned phase out of our Alpha Server product line. IPG net revenue growth was due mainly to increased unit volumes of printer supplies resulting from the continued expansion of printer hardware placements and the strong performance of color-related products. The HPFS net revenue increase was due primarily to portfolio growth, increased operating lease activity and higher end-of-lease renewals and equipment sales. The net revenue growth in HP Software was due primarily to growth in our Business Technology Optimization ("BTO") business as a result of Opsware acquisition and increases in support and service contracts.