HP 2007 Annual Report Download - page 40

Changes to our compensation and benefit programs could adversely affect our ability to attract and retain employees.
We have historically used stock options and other forms of share-based payment awards as key components of our total
rewards employee compensation program in order to align employees’ interests with the interests of our stockholders,
encourage employee retention and provide competitive compensation and benefit packages. HP began recording charges to
earnings for stock-based compensation expense in the first quarter of fiscal 2006 in accordance with Statement of Financial
Accounting Standards No. 123 (revised 2004), “Share-Based Payment.” As a result, we began to incur increased
compensation costs associated with our stock-based compensation programs. Moreover, difficulties relating to obtaining
stockholder approval of equity compensation plans could make it harder or more expensive for us to grant share-based
payment awards to employees in the future. Like other companies, HP has reviewed its equity compensation strategy in light
of the current regulatory and competitive environment and has reduced the total number of share-based payment awards
granted to employees and the number of employees who receive share-based payment awards. Due to this change in our
stock-based compensation strategy, combined with the pension and other benefit plan changes undertaken to reduce costs and
our increasing reliance on variable pay, we may find it difficult to attract, retain and motivate employees, and any such
difficulty could materially adversely affect our business.
HP’s stock price has historically fluctuated and may continue to fluctuate, which may make future prices of HP’s stock
difficult to predict.
HP’ s stock price, like that of other technology companies, can be volatile. Some of the factors that could affect our stock
price are:
• speculation in the press or investment community about, or actual changes in, our business, strategic position,
market share, organizational structure, operations, financial condition, financial reporting and results, effectiveness
of cost cutting efforts, value or liquidity of our investments, exposure to market volatility, prospects, business
combination or investment transactions, or executive team;
• the announcement of new products, services, technological innovations or acquisitions by HP or its competitors; and
• quarterly increases or decreases in revenue, gross margin, earnings or cash flow from operations, changes in
estimates by the investment community or guidance provided by HP, and variations between actual and estimated
financial results.
General or industry-specific market conditions or stock market performance or domestic or international macroeconomic
and geopolitical factors unrelated to HP’ s performance also may affect the price of HP common stock. For these reasons,
investors should not rely on recent trends to predict future stock prices, financial condition, results of operations or cash
flows. In addition, following periods of volatility in a company’ s securities, securities class action litigation against a
company is sometimes instituted. If instituted against HP, this type of litigation could result in substantial costs and the
diversion of management time and resources.
System security risks and systems integration issues could disrupt our internal operations or information technology services
provided to customers, and any such disruption could harm our revenue, increase our expenses and harm our reputation and
stock price.
Experienced computer programmers and hackers may be able to penetrate our network security and misappropriate our
confidential information or that of third parties, create system disruptions or cause shutdowns. In addition, computer
programmers and hackers may be able to develop and deploy viruses, worms, and other malicious software programs that
attack our products or otherwise exploit
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