HP 2009 Annual Report Download - page 2

In 2009, the global economy experienced the
worst recession in a generation. At HP, all of our
work to reduce our cost base and to make it more
variable proved immensely valuable. Beginning
in our first fiscal quarter, we had to address a
rapidly deteriorating demand environment across
our product portfolio. We set a goal of controlling
discretionary spending, while keeping the muscle
of the organization intact and maintaining forward
progress on our core strategy. At the same time, we
focused on executing the integration of the services
businesses acquired from Electronic Data Systems
Corporation (EDS) in August 2008, ultimately
rebranding the business HP Enterprise Services
within the HP Enterprise Business. Although there
is still much work to do, we enter fiscal 2010 in a
stronger competitive position.
All of our efforts resulted in a solid performance
relative to the industry and the economic
environment:
•Netrevenueof$114.6billion
•GAAPoperatingprotof$10.1billion
•GAAPdilutedearningspershareof$3.14
•Non-GAAPoperatingprotof$12.6billion*
•Non-GAAPdilutedearningspershareof$3.85*
A solid performance by a more agile company
Over the last five years, HP has become a much
more agile company, able to adapt and benefit
from changing market conditions. In fiscal 2009,
we gained share in key markets and continued to
invest for growth in research and development,
acquisitions, and sales coverage.
Perhaps nowhere has this agility been more evident
thaninourPersonalSystemsGroup(PSG).Inthe
rstquarter,PSGrevenuedeclined19percentfrom
the prior year, but the business was able to adjust
quickly to the new environment, rationalizing an
operating model that encompasses the industry’s
largest PC supply chain and tens of thousands
of resellers and retailers around the world.
PSGdeliveredsolidmarginsandcontinuedto
drive innovation into the market with a steady
rolloutofhigh-performing,well-designed,and
well-receivedproducts.Overthecourseofthe
year,PSGnotonlyreafrmeditspositionasthe
worldwide leader in PC market share, but also
captured the #1 position in the U.S. enterprise
marketwithdouble-digitsharegains.
IntheImagingandPrintingGroup(IPG),thedecline
indemandhitespeciallyhardearlyintheyear.IPG
has made significant progress in its cost structure,
inventory management, and overall operational
rigor. Operationally, it is in much better shape as it
entersscal2010.IPGisgainingtractioninretail
photo kiosks, which is an exciting opportunity. The
kiosks generally stay installed for many years and
generate significant supplies usage. Managed Print
Services is another important area that is getting a
lot of focus. The revenues from services contracts
arelonger-termaswellasmorestable,andoverthe
lastveyearswe’vegrownthisintoamulti-billion
dollarbusiness.Incommercialprinting,theanalog-
to-digitalshiftisoccurringattherateofroughly
200 billion pages a year, and we are leveraging
our technology to accelerate and profit from the
transition.
Dear Fellow Stockholders,
CEO letter