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HP Invents: - PowerPoint PPT Presentation

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  1. HP Invents: Financial Analysis for the Savvy Investor HP Invents

  2. Corporate Objectives • Provide products, services and solutions of the highest quality and deliver more value to our customers that earns their respect and loyalty. • Achieve sufficient profit to finance our company growth, create value for our shareholders and provide the resources we need to achieve our other corporate objectives. • View change in the market as an opportunity to grow; to use our profits and our ability to develop and produce innovative products, services and solutions that satisfy emerging customer needs. HP Invents

  3. Strategic Areas of Involvement • Imaging and Personal Systems Group (IPSG) • HP Financial Services (HPFS) • Corporate Investments • Technology Solutions Group (TSG) • Enterprise Storage and Servers (ESS) • HP Services (HPS) • Software HP Invents

  4. Products and Services • Personal Computers and Access Devices • Apple IPod – by HP • Notebooks • IT Infrastructure • New Contract with NASDAQ • Global Services • Imaging and Printing • Relationship with Dreamworks (Shrek 2, et al.) • Relationship with National Gallery, London, to preserve Master Pieces HP Invents

  5. Competitors • Dell • Lexmark • Xerox • Veritas • IBM • BMC Software, Inc. HP Invents

  6. Risks • The ability to develop, manufacture and market products and services that meet customer requirements for innovation and quality. • The ability to effectively manage the transition of the company’s products and services due to technological innovations. • The ability to continue to license and enforce the company’s intellectual property rights on which the business depends. • The stability of general economic conditions, including but not limited to, foreign currency exchange rate risk. HP Invents

  7. The Old Guard • Carleton S. Fiorina – Former Chairman and Chief Executive Officer (1999-2005) • Primarily responsible for the 2002 acquisition of Compaq • January 24, 2005 – Management reorganizes, redistributing some of Fiorina’s day-to-day responsibilities • February 9, 2005 – Fiorina Resigns HP Invents

  8. The New Guard • Mark Hurd – New Chief Executive Officer and President, as of 3/29/05. • Previously spent 25 years with NCR Corp., culminating in two-year tenure as CEO • As CEO of NCR, generated 6.0 billion in revenue in fiscal year 2004, up 7 percent from ’03, and net income rose nearly fivefold to 290 million. HP Invents

  9. HP Financial Data HP Invents

  10. FY 2004 Revenue Report Actual Revenue ’05Y/Y Increase • Storage & Servers 4.047 billion 9% increase • HP Services 3.815 billion 20% increase • Software 240 million 18% increase • Personal Systems 6.873 billion 11% increase • Imaging & Printing 6.067 billion 3% increase • HP Financial Services 555 million 26% increase • All increases are from FY 2003 HP Invents

  11. FY 2004 Profit Report Profit% Profit Inc. from ‘03 • Storage & Servers 71 million 1.8% • HP Services 281 million 7.4% • Personal Systems 147 million 2.1% • Imaging & Printing 932 million 15.4% • HP Financial Services 45 million 8.1% HP Invents

  12. 2005 Statements • Q1 2005 Revenue of 21.5 billion, a 10% increase from Q1 2004 • HPQ estimates Q2 revenue to be between 21.2 – 21.6 billion • HPQ estimates Q2 non-GAAP Earnings Per Share to be 0.35 – 0.37 HP Invents

  13. HP v. Industry/Sector HP Invents

  14. The buzz on the street… • DELL stock is down 8% in the year to date • HPQ stock has seen an 11% increase since naming Mark Hurd the new CEO on March 29, 2005 • DELL has scaled back their estimated 2005 growth rate • DELL’s goal is to achieve 80 billion dollars of annual revenue by 2007… HPQ already exceeds that amount. • First Albany Analyst Services upgraded HPQ to a buy rating and estimates a $25 price target • HPQ was just awarded a 5 year contract with the United States Air Force HP Invents

  15. When Compared to Dell… HP Invents

  16. Quick Ratios HPQ Dell • Debt to Assets 0.5066 0.7206 • Debt to Equity 1.0270 2.5800 • Working Capital 14.313 billion 2.761 billion • Effective Tax Rate 14.18% 31.54% • ETR 5yr Average 16.45% 29.68% HP Invents

  17. S&P Evaluation HPQDELL • Earnings and Dividend Rank A- B+ • Fair Value Rank 4+ 5+ • Investability Quotient 95 100 • Technical Evaluation Bullish* Bearish** • Relative Strength Rank 84% 48% • * S&P Star Report has ranked HPQ bullish since March 2005 • ** S&P Star Report has ranked DELL bearish since February 2005 HP Invents

  18. 6 Month Stock Performance: HP v. Dell v. DJIA HP Invents

  19. Comparisons HP Invents

  20. WHY HP? • HP Makes More Things More Possible • HP is the leader in the Science of almost Limitless Possibilities • Because With HP - Everything Is Possible! HP Invents

  21. Questions?? HP Invents