HP 2014 Annual Report Download - page 109

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 2: Segment Information (Continued)
•Technology Services provides support services and technology consulting optimizing EG’s
hardware platforms, and focuses on cloud, mobility and big data. These services are available in
the form of service contracts, pre-packaged offerings or on a customized basis.
Enterprise Services provides technology consulting, outsourcing and support services across
infrastructure, applications and business process domains. ES is comprised of Infrastructure Technology
Outsourcing, Application and Business Services.
•Infrastructure Technology Outsourcing delivers comprehensive services that encompass the
management of data centers, IT security, cloud computing, workplace technology, networks,
unified communications and enterprise service management.
•Application and Business Services helps clients develop, revitalize and manage their applications
and information assets.
Software provides IT management, application testing and delivery, information management, big
data analytics, security intelligence and risk management solutions for businesses and enterprises of all
sizes. Our software offerings include licenses, support, professional services and SaaS.
HP Financial Services provides flexible investment solutions, such as leasing, financing, utility
programs and asset management services, for customers to enable the creation of unique technology
deployment models and acquire complete IT solutions, including hardware, software and services from
HP and others. Providing flexible services and capabilities that support the entire IT lifecycle, HPFS
partners with customers globally to help build investment strategies that enhance their business agility
and support their business transformation. HPFS offers a wide selection of investment solution
capabilities for large enterprise customers and channel partners, along with an array of financial options
to SMBs and educational and governmental entities.
Corporate Investments includes HP Labs and certain cloud-related business incubation projects
among others.
Segment Policy
HP derives the results of the business segments directly from its internal management reporting
system. The accounting policies HP uses to derive segment results are substantially the same as those
the consolidated company uses. Management measures the performance of each segment based on
several metrics, including earnings from operations. Management uses these results, in part, to evaluate
the performance of, and to allocate resources to, each of the segments.
Segment revenue includes revenues from sales to external customers and intersegment revenues
that reflect transactions between the segments on an arm’s-length basis. Intersegment revenues
primarily consist of sales of hardware and software that are sourced internally and, in the majority of
the cases, are financed as operating leases by HPFS. HP’s consolidated net revenue is derived and
reported after the elimination of intersegment revenues from such arrangements.
HP periodically engages in intercompany licensing arrangements that may result in advance
payments between subsidiaries. Revenues from intercompany licensing arrangements are deferred and
recognized ratably over the term of the arrangement by the legal entities involved in such transactions;
however, these payments are eliminated from revenues as reported by HP and its business segments.
As disclosed in Note 6, during fiscal 2014, HP executed a multi-year intercompany licensing
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