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HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 7: Goodwill and Purchased Intangible Assets
Goodwill
Goodwill allocated to HP’s reportable segments as of October 31, 2012 and 2011 and changes in
the carrying amount of goodwill during the fiscal years ended October 31, 2012 and 2011 are as
follows:
Enterprise
Servers,
Storage HP
Personal and Financial Corporate
Systems Printing Services Networking Software Services Investments Total
In millions
Net balance at October 31, 2010 . . $2,500 $2,456 $16,967 $6,610 $ 7,545 $144 $ 2,261 $ 38,483
Goodwill acquired during the
period ................... — 16 66 — 6,786 — — 6,868
Goodwill adjustments/
reclassifications ............ (2) (1) 247 1,460 (268) — (1,423) 13
Impairment loss .............. — — — — — — (813) (813)
Net balance at October 31, 2011 . . $2,498 $2,471 $17,280 $8,070 $14,063 $144 $ 25 $ 44,551
Goodwill acquired during the
period ................... — 16 — — — — — 16
Goodwill adjustments/
reclassifications ............ — — (40) (308) 580 — (25) 207
Impairment loss .............. — — (7,961) — (5,744) — — (13,705)
Net balance at October 31, 2012 . . $2,498 $2,487 $ 9,279 $7,762 $ 8,899 $144 $ — $ 31,069
During fiscal 2012, the decrease in goodwill is related to the impairment loss within the Services
and Software segments as discussed further below. In connection with certain fiscal 2012 organizational
realignments, HP reclassified $280 million of goodwill related to the TippingPoint network security
solutions business from the Enterprise Servers, Storage and Networking (‘‘ESSN’’) segment to the
Software segment. Additionally, HP recorded an increase to goodwill of $244 million in the Software
segment due to a change in the estimated fair values of purchased intangible assets and net tangible
assets associated with the acquisition of Autonomy in conjunction with completing the purchase
accounting in the first quarter.
Goodwill at October 31, 2011 is net of accumulated impairment losses of $813 million related to
the Corporate Investments segment. Goodwill at October 31, 2012 is net of accumulated impairment
losses of $14,518 million. Of that amount, $7,961 million relates to Services, $5,744 million relates to
Software, and the remaining $813 million relates to the fiscal 2011 charge related to Corporate
Investments mentioned above.
HP reviews goodwill for impairment annually as of the first day of its fourth fiscal quarter and
whenever events or changes in circumstances indicate the carrying value of goodwill may not be
recoverable. HP’s goodwill impairment test involves a two-step process. In the first step, HP compares
the fair value of each reporting unit to its carrying value. If the fair value of the reporting unit exceeds
its carrying value, goodwill is not impaired and no further testing is required. If the fair value of the
reporting unit is less than the carrying value, HP must perform the second step of the impairment test
to measure the amount of impairment loss, if any. In the second step, the reporting unit’s fair value is
allocated to all of the assets and liabilities of the reporting unit, including any unrecognized intangible
104