HP 2013 Annual Report Download - page 51

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Management’s Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
• In Printing, we are experiencing the impact of the growth in mobility, weak consumer demand,
weak demand in EMEA and a competitive pricing environment. To be successful in addressing
these challenges, we need to execute on our key initiatives of focusing on products targeted at
high usage categories, developing emerging market opportunities, and introducing new revenue
delivery models to consumer customers.
• In EG, we are experiencing revenue declines due to multiple market trends and a highly
competitive pricing environment, including the increasing demand for hyperscale computing
infrastructure products and the transition to cloud computing. In addition, the market for our
BCS products continues to weaken as the overall market for UNIX products contracts. To be
successful in overcoming these challenges, we must address business model and go-to-market
execution challenges, including improved channel execution, and continue to pursue new product
innovation, such as HP Moonshot servers, 3PAR storage and the HP CloudSystem and in the
areas of software-defined networking, blade servers and wireless networking.
• In ES, we are facing market and macroeconomic pressures, a competitive pricing environment,
internal execution challenges, and weak public sector spending. To be successful in addressing
these challenges, we must execute on our multi-year turnaround plan, which includes a cost
reduction initiative to align our costs to our revenue trajectory and initiatives targeted at
improved execution in the areas of sales performance and accountability, contracting practices
and pricing.
• In Software, we are facing multiple challenges, including the market shift to SaaS and
go-to-market execution challenges. To be successful in addressing these challenges, we must
improve our go-to-market execution with integrated customer solutions more aligned to
customer demand and achieve broader integration across our overall product portfolio as we
work to capitalize on the important market opportunities in the areas of cloud, big data, security
and mobility.
To address these challenges, we need to continue to pursue new product innovation with a view
towards developing new products and services aligned with market demand, industry trends and with
the needs of our customers and partners. In addition, we need to continue to improve our operations,
with a particular focus on enhancing our end-to-end processes. We also need to continue to optimize
our sales coverage models, align our sales incentives with our strategic goals, improve channel
execution, strengthen our capabilities in our areas of strategic focus, and develop and capitalize on
market opportunities.
For a further discussion of trends, uncertainties and other factors that could impact our operating
results, see the section entitled ‘‘Risk Factors’’ in Item 1A, which is incorporated herein by reference.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
General
The Consolidated Financial Statements of HP are prepared in accordance with U.S. generally
accepted accounting principles (‘‘GAAP’’), which require management to make estimates, judgments
and assumptions that affect the reported amounts of assets, liabilities, net revenue and expenses, and
the disclosure of contingent liabilities. Management bases its estimates on historical experience and on
various other assumptions that it believes to be reasonable under the circumstances, the results of
which form the basis for making judgments about the carrying amount of assets and liabilities that are
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