HP 2015 Annual Report Download - page 47

Table of Contents
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•enterprise IT infrastructure, including enterprise server and storage technology, networking products and solutions, technology support and
maintenance;
•multi-vendor customer services, including technology consulting, outsourcing and support services across infrastructure, applications and
business process domains; and
•software products and solutions, including application testing and delivery, big data analytics, enterprise security, information governance
and IT Operations Management.
As of October 31, 2015, we had seven segments for financial reporting purposes: Personal Systems, Printing, the Enterprise Group ("EG"), Enterprise
Services ("ES"), Software, HP Financial Services ("HPFS") and Corporate Investments. Effective November 1, 2015, we report three segments as part of
continuing operations: Personal Systems, Printing and Corporate Investments.
The following provides an overview of our key financial metrics by segment for fiscal 2015:
HP consolidated net revenue declined 7.3% (decreased 2.1% on a constant currency basis) in fiscal 2015 as compared to fiscal 2014. The leading
contributors to the net revenue decline were unfavorable currency impacts across all major segments, key account runoff and soft demand in Infrastructure
Technology Outsourcing ("ITO") in ES, lower desktop sales in Personal Systems and lower sales of printers and supplies. Partially offsetting these declines
was growth within the EG segment from sales of ISS servers. Gross margin was 24.0% ($24.8 billion) and 23.9% ($26.6 billion) for fiscal 2015 and 2014,
respectively. The 0.1 percentage point increase in gross margin was due primarily to service delivery efficiencies and improvements in underperforming
contracts in ES. Partially offsetting the gross margin increase was the impact from a higher mix of ISS products in EG, competitive pricing pressures in
Printing and the impact from the sale of intellectual property ("IP") in the prior-year period. We continue to experience gross margin pressures resulting from a
competitive pricing environment across our hardware portfolio. HP's operating margin decreased by 1.1 percentage points in fiscal 2015 as compared to fiscal
2014 due primarily to separation costs, pension plan settlement charges, data center impairments and the impact from the sale of IP in the prior-year period.
Partially offsetting these
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Net revenue(1) $ 103,355 $ 31,469 $ 21,232 $ 52,701 $ 27,907 $ 19,806 $ 3,458 $ 3,216 $ 27
Year-over-year change % (7.3)% (8.3)% (8.5)% (8.4)% 0.7% (11.6)% (6.6)% (8.1)% (91.1)%
Earnings from operations(2) $ 5,471 $ 1,064 $ 3,865 $ 4,929 $ 3,981 $ 1,051 $ 760 $ 349 $ (565)
Earnings from operations as
a % of net revenue 5.3% 3.4% 18.2% 9.4% 14.3% 5.3% 22.0% 10.9% NM
Year-over-year change
percentage points (1.1)pts (0.3)pts 0.0pts (0.2)pts (0.1)pts 1.7pts (0.4)pts (0.2)pts NM
(1) HP consolidated net revenue excludes intersegment net revenue and other.
(2) Segment earnings from operations exclude corporate and unallocated costs, stock-based compensation expense, amortization of intangible assets, restructuring charges, acquisition
and other related charges, separation costs, defined benefit plan settlement charges and impairment of data center assets.
(3) "NM" represents not meaningful.
Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research℠
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