HP (HPQ) 10-Q 8 Jun 10 2010 Q2 Quarterly report Financial data

Consolidated Condensed Statemen

Consolidated Condensed Statements of Earnings (USD $)
In Millions, except Per Share data	3 Months Ended Apr. 30, 2010	3 Months Ended Apr. 30, 2009	6 Months Ended Apr. 30, 2010	6 Months Ended Apr. 30, 2009
Net revenue:
Products	$20,570	$17,418	$41,573	$36,047
Services	10,172	9,875	20,239	19,964
Financing income	107	90	214	179
Total net revenue	30,849	27,383	62,026	56,190
Costs and expenses:
Cost of products	15,859	13,361	32,206	27,529
Cost of services	7,669	7,500	15,305	15,319
Financing interest	73	84	152	170
Research and development	722	716	1,403	1,448
Selling, general and administrative	3,064	2,880	5,996	5,773
Amortization of purchased intangible assets	347	380	677	792
In-process research and development charges				6
Restructuring charges	180	94	311	240
Acquisition-related charges	77	75	115	123
Total operating expenses	27,991	25,090	56,165	51,400
Earnings from operations	2,858	2,293	5,861	4,790
Interest and other, net	(91)	(180)	(290)	(412)
Earnings before taxes	2,767	2,113	5,571	4,378
Provision for taxes	567	392	1,121	801
Net earnings	$2,200	$1,721	$4,450	$3,577
Net earnings per share:
Basic (in dollars per share)	0.94	0.72	1.89	1.49
Diluted (in dollars per share)	0.91	0.71	1.84	1.46
Cash dividends declared per share (in dollars per share)			0.16	0.16
Weighted-average shares used to compute net earnings per share:
Basic (in shares)	2,345	2,394	2,352	2,402
Diluted (in shares)	2,406	2,438	2,412	2,448

Consolidated Condensed Balance

Consolidated Condensed Balance Sheets (USD $)
In Millions	6 Months Ended Apr. 30, 2010	12 Months Ended Oct. 31, 2009
Current assets:
Cash and cash equivalents	$14,131	$13,279
Short-term investments	39	55
Accounts receivable	14,753	16,537
Financing receivables	2,795	2,675
Inventory	6,436	6,128
Other current assets	13,541	13,865
Total current assets	51,695	52,539
Property, plant and equipment	11,242	11,262
Long-term financing receivables and other assets	11,726	11,289
Goodwill	34,312	33,109
Purchased intangible assets	7,019	6,600
Total assets	115,994	114,799
Current liabilities:
Notes payable and short-term borrowings	3,934	1,850
Accounts payable	13,350	14,809
Employee compensation and benefits	3,410	4,071
Taxes on earnings	1,043	910
Deferred revenue	6,526	6,182
Accrued restructuring	700	1,109
Other accrued liabilities	13,308	14,072
Total current liabilities	42,271	43,003
Long-term debt	13,728	13,980
Other liabilities	16,183	17,052	[1]
Commitments and contingencies
HP stockholders' equity
Preferred stock, $0.01 par value (300 shares authorized; none issued)	0	0
Common stock, $0.01 par value (9,600 shares authorized; 2,345 and 2,365 shares issued and outstanding, respectively)	23	24
Additional paid-in capital	14,613	13,804
Retained earnings	31,631	29,936
Accumulated other comprehensive loss	(2,756)	(3,247)
Total HP stockholders' equity	43,511	40,517
Noncontrolling interests	301	247	[1]
Total stockholders' equity	43,812	40,764
Total liabilities and stockholders' equity	$115,994	$114,799
[1]Reflects the adoption of the accounting standard related to the presentation of noncontrolling interests in consolidated financial statements.

1_Consolidated Condensed Balanc

Consolidated Condensed Balance Sheets (Parenthetical) (USD $)
Share data in Millions, except Per Share data	Apr. 30, 2010	Oct. 31, 2009
Consolidated Condensed Balance Sheets
Preferred stock, par value (in dollars per share)	0.01	0.01
Preferred stock, shares authorized	300	300
Preferred stock, shares issued	0	0
Common stock, par value (in dollars per share)	0.01	0.01
Common stock, shares authorized	9,600	9,600
Common stock, shares issued	2,345	2,365
Common stock, shares outstanding	2,345	2,365

2_Consolidated Condensed Statem

Consolidated Condensed Statements of Cash Flows (USD $)
In Millions	6 Months Ended Apr. 30, 2010	6 Months Ended Apr. 30, 2009
Cash flows from operating activities:
Net earnings	$4,450	$3,577
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	2,346	2,367
Stock-based compensation expense	381	351
Provision for doubtful accounts - accounts and financing receivables	111	211
Provision for inventory	82	137
In-process research and development charges		6
Restructuring charges	311	240
Deferred taxes on earnings	(286)	52
Excess tax benefit from stock-based compensation	(263)	(28)
Other, net	149	61
Changes in operating assets and liabilities:
Accounts and financing receivables	1,709	1,776
Inventory	(190)	1,987
Accounts payable	(1,548)	(3,506)
Taxes on earnings	726	904
Restructuring	(783)	(548)
Other assets and liabilities	(1,697)	(1,497)
Net cash provided by operating activities	5,498	6,090
Cash flows from investing activities:
Investment in property, plant and equipment	(1,771)	(1,658)
Proceeds from sale of property, plant and equipment	268	250
Purchases of available-for-sale securities and other investments	(28)	(55)
Maturities and sales of available-for-sale securities and other investments	103	103
Payments made in connection with business acquisitions, net	(2,512)	(348)
Net cash used in investing activities	(3,940)	(1,708)
Cash flows from financing activities:
Issuance (payments) of commercial paper and notes payable, net	1,855	(4,449)
Issuance of debt	50	4,778
Payment of debt	(244)	(110)
Issuance of common stock under employee stock plans	2,266	493
Repurchase of common stock	(4,511)	(2,039)
Excess tax benefit from stock-based compensation	263	28
Dividends	(385)	(385)
Net cash used in financing activities	(706)	(1,684)
Increase in cash and cash equivalents	852	2,698
Cash and cash equivalents at beginning of period	13,279	10,153
Cash and cash equivalents at end of period	14,131	12,851
Supplemental schedule of non-cash investing and financing activities:
Issuance of common stock and stock awards assumed in business acquisitions	61
Purchase of assets under financing arrangement		272
Purchase of assets under capital lease	$92	$41

Basis of Presentation and Chang

Basis of Presentation and Changes In Significant Accounting Policies
	6 Months Ended Apr. 30, 2010
Basis of Presentation and Changes In Significant Accounting Policies
Basis of Presentation and Changes In Significant Accounting Policies	Note1: Basis of Presentation and Changes in Significant Accounting Policies In the opinion of management, the accompanying Consolidated Condensed Financial Statements of Hewlett-Packard Company and its consolidated subsidiaries ("HP") contain all adjustments, including normal recurring adjustments, necessary to present fairly HP's financial position as of April30, 2010, its results of operations for the three and six months ended April30, 2010 and 2009 and its cash flows for the six months ended April30, 2010 and 2009. The Consolidated Condensed Balance Sheet as of October31, 2009 is derived from the October31, 2009 audited consolidated financial statements. Certain reclassifications have been made to prior-period amounts in order to conform to the current period presentation. The results of operations for the three and six months ended April30, 2010 are not necessarily indicative of the results to be expected for the full year. The information included in this Quarterly Report on Form10-Q should be read in conjunction with "Risk Factors," "Legal Proceedings," "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Quantitative and Qualitative Disclosures About Market Risk" and the Consolidated Financial Statements and notes thereto included in Items1A, 3, 7, 7A and 8, respectively, of the Hewlett-Packard Company Annual Report on Form10-K for the fiscal year ended October31, 2009. The preparation of financial statements in accordance with U.S. generally accepted accounting principles ("GAAP") requires management to make estimates and assumptions that affect the amounts reported in HP's Consolidated Condensed Financial Statements and accompanying notes. Actual results could differ materially from those estimates. Accounting Pronouncements The following disclosure on accounting pronouncements includes those that may apply to the historical financial statements. In December 2007, the Financial Accounting Standards Board ("FASB") issued a new accounting standard related to business combinations that expands the definition of a "business" and a "business combination"; requires recognition of assets acquired, liabilities assumed, and contingent consideration at their fair value on the acquisition date and through the defined measurement period with subsequent changes recognized in earnings; requires acquisition-related expenses and restructuring costs to be recognized separately from the business combination and expensed as incurred; requires in-process research and development ("IPRD") to be capitalized initially at fair value as an indefinite-lived intangible asset; and requires that changes in accounting for deferred tax asset valuation allowances and acquired income tax uncertainties after the measurement period be recognized as a component of provision for taxes. The standard also establishes disclosure requirements to enable the evaluation of the nature and financial effects of the business combination. In November 2008, the FASB issued a new accounting standard related to defensive intangible assets. Defensive intangible assets are acquired intangible assets that the acquirer does not

Stock-Based Compensation

Stock-Based Compensation
	6 Months Ended Apr. 30, 2010
Stock-Based Compensation
Stock-Based Compensation	Note2: Stock-Based Compensation HP's stock-based compensation plans include incentive compensation plans and an employee stock purchase plan. Incentive compensation plans include principal equity plans as well as various equity plans assumed through acquisitions. Principal equity plans include performance-based restricted units ("PRU"), stock options and restricted stock awards. Total stock-based compensation expense before income taxes for the three and six months ended April30, 2010 was $200million and $381million, respectively. The resulting income tax benefit for the three and six months ended April30, 2010 was $64million and $122million, respectively. Total stock-based compensation expense before income taxes for the three and six months ended April30, 2009 was $191million and $351million, respectively. The resulting income tax benefit for the three and six months ended April30, 2009 was $59million and $107million, respectively. Performance-based Restricted Units In fiscal 2008, HP implemented a program that provides for the issuance of PRUs representing hypothetical shares of HP common stock. Under the PRU program, HP annually awards a target number of units at the beginning of each three-year performance period. The number of shares released at the end of the performance period will range from zero to two times the target number depending on performance during the period. The performance goals are based on HP's annual cash flow from operations as a percentage of revenue and average quarterly total shareholder return ("TSR") relative to the SP500 over the three-year performance period. Recipients of PRU awards generally must remain employed by HP on a continuous basis through the end of the applicable three-year performance period in order to receive any portion of the shares subject to that award. The expense for these awards, net of estimated forfeitures, is recorded over the requisite service period based on the number of target shares that are expected to be earned and the achievement of the cash flow goals during the performance period. HP estimates the fair value of a target PRU share using the Monte Carlo simulation model, as the TSR modifier contains a market condition. The following weighted-average assumptions were used to determine the weighted-average fair values of the PRU awards: Six months ended April30 2010 2009 Weighted-average fair value of grants per share $ 57.13 (1) $ 40.56 (2) Expected volatility(3) 38 % 35 % Risk-free interest rate 0.73 % 1.34 % Dividend yield 0.64 % 0.88 % Expected life in months 22 30 (1) Reflects the weighted-average fair value for the third year of the three-year performance period applicable to PRUs granted in fiscal 2008, for the second year of the three-year performance period applicable to PRUs granted in fiscal 2009 and for the first year of the three-year performance period applicable to PRUs granted in fiscal 2010. The estimated fair value of a target share for the third year for PRUs granted in fiscal 2009 and for the second and third years for PRUs granted in fiscal 2010 wi

Net Earnings Per Share

Net Earnings Per Share
	6 Months Ended Apr. 30, 2010
Net Earnings Per Share
Net Earnings Per Share	Note3: Net Earnings Per Share HP calculates basic earnings per share using net earnings and the weighted-average number of shares outstanding during the reporting period. Diluted EPS includes any dilutive effect of outstanding stock options, PRUs, restricted stock units, and restricted stock. The reconciliation of the numerators and denominators of the basic and diluted EPS calculations was as follows: Three months ended April30 Six months ended April30 2010 2009 2010 2009 Inmillions, except per share amounts Numerator: Net earnings(1) $ 2,200 $ 1,721 $ 4,450 $ 3,577 Denominator: Weighted-average shares used to compute basic EPS 2,345 2,394 2,352 2,402 Dilutive effect of employee stock plans 61 44 60 46 Weighted-average shares used to compute diluted EPS 2,406 2,438 2,412 2,448 Net earnings per share: Basic $ 0.94 $ 0.72 $ 1.89 $ 1.49 Diluted $ 0.91 $ 0.71 $ 1.84 $ 1.46 (1) Net earnings available to participating securities were not significant for the three and six months ended April30, 2010 and 2009. HP considers restricted stock that provides the holder with a non-forfeitable right to receive dividends to be a participating security. HP excludes options with exercise prices that are greater than the average market price from the calculation of diluted EPS because their effect would be anti-dilutive. For the three and six months ended April30, 2010, HP excluded from the calculation of diluted EPS options to purchase 17million shares and 18million shares, respectively, compared to 110million shares and 107million shares, respectively, in the prior-year comparable periods. HP also excluded from the calculation of diluted EPS options to purchase an additional 2million shares and 3million shares in the second quarter and the first half of fiscal 2010, respectively, compared to an additional 1million shares in the prior-year comparable periods, whose combined exercise price, unamortized fair value and excess tax benefits were greater in each of those periods than the average market price for HP's common stock because their effect would be anti-dilutive. As discussed in Note2, HP implemented the PRU program in fiscal 2008. HP includes the shares underlying PRU awards in the calculation of diluted EPS when they become contingently issuable and excludes such shares when they are not contingently issuable. Accordingly, for the three and six months ended April30, 2010, HP has included 9million shares underlying the PRU awards granted in fiscal 2009 and 2008 when calculating diluted EPS as those shares became contingently issuable upon the satisfaction of the cash flow from operations condition with respect to the first year of the three-year performance period applicable to the fiscal 2009 awards and the first and second years of the three-year performance period applicable to the fiscal 2008 awards. HP has excluded all other shares underlying the fiscal 2009 an

Balance Sheet Details

Balance Sheet Details
	6 Months Ended Apr. 30, 2010
Balance Sheet Details
Balance Sheet Details	Note4: Balance Sheet Details Balance sheet details were as follows: Accounts and Financing Receivables April30, 2010 October31, 2009 Inmillions Accounts receivable $ 15,306 $ 17,166 Allowance for doubtful accounts (553 ) (629 ) $ 14,753 $ 16,537 Financing receivables $ 2,847 $ 2,723 Allowance for doubtful accounts (52 ) (48 ) $ 2,795 $ 2,675 HP has revolving trade receivables-based facilities permitting it to sell certain trade receivables to third parties on a non-recourse basis. The aggregate maximum capacity under these programs was $507million as of April30, 2010. HP sold $955million of trade receivables during the first six months of fiscal 2010. As of April30, 2010, HP had $182million available under these programs. Inventory April30, 2010 October31, 2009 Inmillions Finished goods $ 4,311 $ 4,092 Purchased parts and fabricated assemblies 2,125 2,036 $ 6,436 $ 6,128 Property, Plant and Equipment April30, 2010 October31, 2009 Inmillions Land $ 527 $ 513 Buildings and leasehold improvements 8,019 7,472 Machinery and equipment 13,222 12,959 21,768 20,944 Accumulated depreciation (10,526 ) (9,682 ) $ 11,242 $ 11,262

Acquisitions

Acquisitions
	6 Months Ended Apr. 30, 2010
Acquisitions
Acquisitions	Note5: Acquisitions In fiscal 2010, HP adopted a new accounting standard related to business combinations. HP has included the results of operations of the business that it acquired in fiscal 2010 in HP's consolidated results as of the date of the acquisition. HP allocates the purchase price of its acquisitions to the tangible assets, liabilities and intangible assets acquired, including IPRD, based on their estimated fair values. The excess of the purchase price over those fair values is recorded as goodwill. IPRD is capitalized at fair value as an indefinite-lived intangible asset until the project is complete. Acquisition-related expenses and restructuring costs are recognized separately from the business combination and expensed as incurred. Measurement period adjustments that HP determines to be material will be applied retrospectively to the period of acquisition in HP's consolidated financial statements and, depending on the nature of the adjustments, other periods subsequent to the period of acquisition could also be affected. 3Com Acquisition On April12, 2010, HP completed its acquisition of 3Com Corp ("3Com"), a global enterprise provider of networking switching, routing and security solutions, at a price of approximately $7.90 per share in cash. The aggregate purchase price of approximately $3.3billion consisted of cash paid for outstanding common stock, vested in-the-money stock awards and the estimated fair value of earned unvested stock awards assumed by HP. The purchase price allocation set forth in the table below reflects various preliminary fair value estimates and analyses, including preliminary work performed by third-party valuation specialists, which are subject to change within the measurement period as valuations are finalized. The primary areas of the preliminary purchase price allocation that are not yet finalized relate to the fair values of certain tangible assets and liabilities acquired, the valuation of intangible assets acquired, certain legal matters, income and non-income based taxes and residual goodwill. We expect to continue to obtain information to assist us in determining the fair value of the net assets acquired at the acquisition date during the measurement period. Inmillions Cash and short-term investments $ 747 Accounts receivable 206 Inventory 200 Other tangible assets 81 Accounts payable, debt and other liabilities (322 ) Total net assets 912 Amortizable intangibles assets 987 In-process research and development 106 Goodwill 1,248 Total purchase price $ 3,253 HP reports the financial results of the 3Com business and the ProCurve Networking business in the Corporate Investments segment. Pro forma results of operations for 3Com have not been presented because the acquisition was not material to HP's consolidated results of operations. Goodwill, which represents the excess of the purchase price over the net tangible and intangible assets acquired, is not deductible for tax purposes. The amortizable intangible assets are being amortized on a straight-line basis over their

Goodwill and Purchased Intangib

Goodwill and Purchased Intangible Assets
	6 Months Ended Apr. 30, 2010
Goodwill and Purchased Intangible Assets
Goodwill and Purchased Intangible Assets	Note6: Goodwill and Purchased Intangible Assets Goodwill Goodwill allocated to HP's business segments as of April30, 2010 and changes in the carrying amount of goodwill for the six months ended April30, 2010 are as follows: Services Enterprise Storage and Servers HP Software Personal Systems Group Imaging and Printing Group HP Financial Services Corporate Investments Total Inmillions Balance at October31, 2009 $ 16,829 $ 5,005 $ 6,140 $ 2,487 $ 2,460 $ 144 $ 44 $ 33,109 Goodwill acquired during the period 1,248 1,248 Goodwill adjustments (7 ) (29 ) (2 ) (5 ) (2 ) (45 ) Balance at April30, 2010 $ 16,822 $ 4,976 $ 6,138 $ 2,482 $ 2,458 $ 144 $ 1,292 $ 34,312 During the second quarter of fiscal 2010, HP recorded approximately $1.2billion of goodwill relating to 3Com at the date of the acquisition based on its preliminary purchase price allocation. During the six months ended April30, 2010, HP recorded reductions to goodwill primarily for tax adjustments related to tax deductible stock-based awards for certain acquisitions for which the acquisition date was before the effective date of the new accounting standard for business combinations. The reduction to goodwill was partially offset by adjustments made for currency translation related to certain non-U.S. subsidiaries of Electronic Data Systems Corporation ("EDS") whose functional currency is not the U.S. dollar. Purchased Intangible Assets HP's purchased intangible assets associated with completed acquisitions are composed of: April30, 2010 October31, 2009 Gross Accumulated Amortization Net Gross Accumulated Amortization Net Inmillions Customer contracts, customer lists and distribution agreements $ 7,103 $ (3,431 ) $ 3,672 $ 6,763 $ (3,034 ) $ 3,729 Developed and core technology and patents 4,789 (3,021 ) 1,768 4,171 (2,747 ) 1,424 Product trademarks 279 (228 ) 51 247 (222 ) 25 Total amortizable purchased intangible assets 12,171 (6,680 ) 5,491 11,181 (6,003 ) 5,178 IPRD 106 106 Compaq trade name 1,422 1,422 1,422 1,422 Total purchased intangible assets $ 13,699 $ (6,680 ) $ 7,019 $ 12,603 $ (6,003 ) $ 6,600 Under the revised accounting standard adopted in the first quarter of fiscal 2010, IPRD is capitalized at fair value as an intangible asset with an indefinite life and assessed for impairment thereafter. Upon completion of the development of the underlying marketable products, the capitalized IPRD asset will be amortized over its estimated useful life. Estimated future amortization expense related to finite lived purchased intangible assets at April30, 2010 is as follows: Fiscal year: Inmillions 20

Restructuring Charges

Restructuring Charges
	6 Months Ended Apr. 30, 2010
Restructuring Charges
Restructuring Charges	Note7: Restructuring Charges 3Com Restructuring Plan In connection with the acquisition of 3Com on April12, 2010, HP's management approved and initiated a $39million plan to restructure the operations of 3Com. During the three months ended April30, 2010, $15million of severance costs were recorded related to this plan. The remaining $24million of costs relate to vacating duplicative facilities and other restructuring initiatives and will be paid out through fiscal 2016. Fiscal 2009 Restructuring Plan In May2009, HP's management approved and initiated a restructuring plan to structurally change and improve the effectiveness of the Imaging and Printing Group ("IPG"), the Personal Systems Group ("PSG"), and Enterprise Storage and Servers ("ESS"). The total expected cost of the plan is $303million in severance-related costs associated with the planned elimination of approximately 5,000 positions. As of April30, 2010, approximately 3,500 positions have been eliminated. HP expects the majority of the restructuring costs to be paid out by the fourth quarter of fiscal 2010. Fiscal 2008 HP/EDS Restructuring Plan In connection with the acquisition of EDS on August26, 2008, HP's management approved and initiated a restructuring plan to streamline the combined company's services business and to better align the structure and efficiency of that business with HP's operating model. The restructuring plan is expected to be implemented over four years from the acquisition date and includes changes to the combined company's workforce as well as changes to corporate overhead functions such as real estate and IT. The total expected cost of this restructuring plan is $3.0billion, consisting mainly of severance costs to eliminate approximately 25,000 positions, costs to vacate duplicative facilities and costs associated with early termination of certain contractual obligations. As of April30, 2010, the vast majority of the positions had been eliminated. In future quarters, as part of this action, HP expects to record charges of approximately $369million related to the cost to vacate duplicative facilities. Approximately $1.5billion of the expected costs were associated with pre-acquisition EDS and were reflected in the purchase price of EDS. These costs are subject to change based on the actual costs incurred. The remaining costs are primarily associated with HP and were recorded as a restructuring charge. Summary of Restructuring Plans The adjustments to the accrued restructuring expenses related to all of HP's restructuring plans described above for the six months ended April30, 2010 were as follows: Three months ended April30, 2010 charges Six months ended April30, 2010 charges As of April30, 2010 Balance, October31, 2009 Cash payments Non-cash settlements and other adjustments Balance, April30, 2010 Total costs and adjustments to date Total expected costs and adjustments In millions 3Com Plan $ 0 $ 15 $ 15 $ $ $ 15 $ 15 $ 39 Fiscal 2009 Plan $ 248 $ 3 $ 4 $ (103 ) $ (9 ) $ 140 $ 303 $ 303

Fair Value

Fair Value
	6 Months Ended Apr. 30, 2010
Fair Value
Fair Value	Note8: Fair Value HP adopted the provisions related to the fair value of nonfinancial assets and nonfinancial liabilities in the first quarter of fiscal 2010 for the following major categories of nonfinancial items from the Consolidated Condensed Balance Sheet: Property, plant and equipment, Goodwill, Purchased intangible assets, Accrued restructuring and the asset retirement obligations within Other accrued liabilities and Other liabilities. The provisions of the accounting standard related to estimating fair value and related disclosures are applied to nonfinancial assets and nonfinancial liabilities whenever they are required to be measured at fair value, such as when accounting for a business combination, when evaluating and/or determining impairment, or in accordance with certain other accounting pronouncements. Except for assets and liabilities acquired in a business combination, HP did not measure any material nonfinancial assets and nonfinancial liabilities at fair value on a non-recurring basis for the three and six months ended April30, 2010. Since the beginning of fiscal 2009, the accounting standard relating to fair value measurements and disclosures became effective for HP. This standard establishes a new framework for measuring fair value and expands related disclosures. The framework requires fair value to be determined based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. Valuation techniques used by HP are based upon observable and unobservable inputs. Observable or market inputs reflect market data obtained from independent sources, while unobservable inputs reflect HP's assumptions about market participant assumptions based on best information available. Observable inputs are the preferred source of values. These two types of inputs create the following fair value hierarchy: Level1Quoted prices (unadjusted) for identical instruments in active markets. Level2Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level3Prices or valuations that require management inputs that are both significant to the fair value measurement and unobservable. The following section describes the valuation methodologies HP uses to measure its financial assets and liabilities at fair value. Cash Equivalents and Investments: HP holds time deposits, money market funds, commercial paper, other debt securities primarily consisting of corporate and foreign government notes and bonds, and common stock and equivalents. In general, and where applicable, HP uses quoted prices in active markets for identical assets to determine fair value. If quoted prices in active markets for identical assets are not available to determine fair value, HP uses quoted pr

Financial Instruments

Financial Instruments
	6 Months Ended Apr. 30, 2010
Financial Instruments
Financial Instruments	Note9: Financial Instruments Available-for-Sale Investments Cash equivalents and investments at fair value as of April30, 2010 and October31, 2009 were as follows: April30, 2010 October31, 2009 Cost Gross Unrealized Gain Gross Unrealized Loss Estimated Fair Value Cost Gross Unrealized Gain Gross Unrealized Loss Estimated Fair Value Inmillions Cash Equivalents Time deposits $ 9,046 $ $ $ 9,046 $ 8,870 $ $ $ 8,870 Commercial paper 1,650 1,650 1,388 1,388 Money market funds 1,245 1,245 262 262 Total cash equivalents 11,941 11,941 10,520 10,520 Investments Debt securities: Time deposits 11 11 55 55 Money market funds 29 29 U.S. Treasury securities 5 5 5 5 Foreign bonds 302 50 352 329 49 378 Corporate bonds and other debt securities 84 (32 ) 52 85 (45 ) 40 Total debt securities 431 50 (32 ) 449 474 49 (45 ) 478 Equity securities in public companies 4 2 6 3 2 5 Total cash equivalents and investments $ 12,376 $ 52 $ (32 ) $ 12,396 $ 10,997 $ 51 $ (45 ) $ 11,003 Cash equivalents consist of investments with original maturities of ninety days or less. Available-for-sale securities consist of short-term investments which mature within twelve months or less and long-term investments with maturities longer than twelve months. Investments include primarily time deposits, fixed-interest securities, and institutional bonds. HP estimates the fair values of its investments based on quoted market prices or pricing models using current market rates. These estimated fair values may not be representative of actual values that will be realized in the future. The gross unrealized loss as of April30, 2010 was due primarily to declines in certain debt securities and included $30million that has been in a continuous loss position for more than twelve months. The gross unrealized loss as of October31, 2009 was due primarily to declines in certain debt securities and included $20million that had been in a continuous loss position for more than twelve months. HP does not intend to sell these debt securities, and it is not likely that HP will be required to sell these debt securities prior to the recovery of the amortized cost. In the three and six months ended April30, 2010, HP recognized an impairment charge of $2million associated with debt securities. In the three months ended April30, 2009, HP did not recognize any impairment charge. In the six months ended April30, 2009, HP re

Financing Receivables and Opera

Financing Receivables and Operating Leases
	6 Months Ended Apr. 30, 2010
Financing Receivables and Operating Leases
Financing Receivables and Operating Leases	Note10: Financing Receivables and Operating Leases Financing receivables represent sales-type and direct-financing leases resulting from the marketing of HP's and third-party products. These receivables typically have terms from two to five years and are usually collateralized by a security interest in the underlying assets. Financing receivables also include billed receivables from operating leases. The components of net financing receivables, which are included in financing receivables and long-term financing receivables and other assets, were as follows: April30, 2010 October31, 2009 Inmillions Minimum lease payments receivable $ 6,600 $ 6,413 Allowance for doubtful accounts (114 ) (108 ) Unguaranteed residual value 231 244 Unearned income (573 ) (571 ) Financing receivables, net 6,144 5,978 Less current portion (2,795 ) (2,675 ) Amounts due after one year, net $ 3,349 $ 3,303 Equipment leased to customers under operating leases was $3.3billion at April30, 2010 and $3.0billion at October31, 2009 and is included in machinery and equipment. Accumulated depreciation on equipment under lease was $1.0billion at April30, 2010 and $0.9billion at October31, 2009.

Guarantees

Guarantees
	6 Months Ended Apr. 30, 2010
Guarantees
Guarantees	Note11: Guarantees Guarantees and Indemnifications In the ordinary course of business, HP may provide certain clients with subsidiary performance guarantees and/or financial performance guarantees, which may be backed by standby letters of credit or surety bonds. In general, HP would be liable for the amounts of these guarantees in the event HP or HP's subsidiaries' nonperformance permits termination of the related contract by the client, the likelihood of which HP believes is remote. HP believes that the company is in compliance with the performance obligations under all material service contracts for which there is a performance guarantee. HP has certain service contracts supported by client financing or securitization arrangements. Under specific circumstances involving nonperformance resulting in service contract termination or failure to comply with terms under the financing arrangement, HP would be required to acquire certain assets. HP considers the possibility of its failure to comply to be remote and the asset amounts involved to be immaterial. In the ordinary course of business, HP enters into contractual arrangements under which HP may agree to indemnify the third party to such arrangement from any losses incurred relating to the services they perform on behalf of HP or for losses arising from certain events as defined within the particular contract, which may include, for example, litigation or claims relating to past performance. Such indemnification obligations may not be subject to maximum loss clauses. Historically, payments made related to these indemnifications have been immaterial. Warranty HP provides for the estimated cost of product warranties at the time it recognizes revenue. HP engages in extensive product quality programs and processes, including actively monitoring and evaluating the quality of its component suppliers; however, product warranty terms offered to customers, ongoing product failure rates, material usage and service delivery costs incurred in correcting a product failure, as well as specific product class failures outside of HP's baseline experience, affect the estimated warranty obligation. If actual product failure rates, repair rates or any other post sales support costs differ from these estimates, revisions to the estimated warranty liability would be required. The changes in HP's aggregate product warranty liabilities for the six months ended April30, 2010 were as follows: Inmillions Product warranty liability at October31, 2009 $ 2,409 Accruals for warranties issued 1,437 Adjustments related to pre-existing warranties (including changes in estimates) (35 ) Settlements made (in cash or in kind) (1,308 ) Product warranty liability at April30, 2010 $ 2,503

Borrowings

Borrowings
	6 Months Ended Apr. 30, 2010
Borrowings
Borrowings	Note12: Borrowings Notes Payable and Short-Term Borrowings Notes payable and short-term borrowings, including the current portion of long-term debt, were as follows: April30, 2010 October31, 2009 Amount Outstanding Weighted- Average Interest Rate Amount Outstanding Weighted- Average Interest Rate Inmillions Commercial paper $ 2,077 0.3 % $ 294 1.2 % Current portion of long-term debt 1,428 1.2 % 1,143 1.0 % Notes payable to banks, lines of credit and other 429 2.1 % 413 2.0 % $ 3,934 $ 1,850 Notes payable to banks, lines of credit and other includes deposits associated with HP's banking-related activities of approximately $327million and $326million at April30, 2010 and October31, 2009, respectively. Long-Term Debt Long-term debt was as follows: April30, 2010 October31, 2009 Inmillions U.S. Dollar Global Notes 2002 Shelf Registration Statement: $500 issued at discount to par at a price of 99.505% in June2002 at 6.5%, due July2012 $ 499 $ 499 2006 Shelf Registration Statement: $600 issued at par in February2007 at three-month USD LIBOR plus 0.11%, due March2012 600 600 $900 issued at discount to par at a price of 99.938% in February2007 at 5.25%, due March2012 900 900 $500 issued at discount to par at a price of 99.694% in February2007 at 5.4%, due March2017 499 499 $1,000 issued at par in June2007 at three-month USD LIBOR plus 0.06%, due June2010 1,000 1,000 $1,500 issued at discount to par at a price of 99.921% in March2008 at 4.5%, due March2013 1,499 1,499 $750 issued at discount to par at a price of 99.932% in March2008 at 5.5%, due March2018 750 750 $2,000 issued at discount to par at a price of 99.561% in December2008 at 6.125%, due March2014 1,993 1,992 $275 issued at par in February2009 at three-month USD LIBOR plus 1.75%, due February2011 275 275 $1,000 issued at discount to par at a price of 99.956% in February2009 at 4.25%, due February2012 1,000 1,000 $1,500 issued at discount to par at a price of 99.993% in February2009 at 4.75%, due June2014 1,500 1,500 2009 Shelf Registration Statement: $750 issued at par in May2009 at three-month USD LIBOR plus 1.05%, due May2011 750 750 $1,000 issued at discount to par at a price of 99.967% in May2009 at 2.25%, due May2011 1,000 1,000 $250 issued at discount to par at a price of 99.984% in May2009 at 2.95%, due August2012 250 250 12,515 12,514 EDS Senior Notes $1,100 issued June2003 at 6.0%, due August2013 1,135 1,140 $300 issued October1999 at 7.45%, due October2029 315 315 1,450 1,455 Other, including capital lease obligations, at 3.75%-8.63%, due in calendar year 2010-2024 797 785 Fair value adjustment re

Income Taxes

Income Taxes
	6 Months Ended Apr. 30, 2010
Income Taxes
Income Taxes	Note13: Income Taxes Provision for Taxes HP's effective tax rate was 20.5% and 18.6% for the three months ended April30, 2010 and April30, 2009, respectively, and 20.1% and 18.3% for the six months ended April30, 2010 and April30, 2009, respectively. HP's effective tax rate increased due to a decline in the percentage of total earnings earned in lower-tax jurisdictions and a decline in its discrete tax benefits relative to consolidated pretax earnings. HP's effective tax rate generally differs from the U.S. federal statutory rate of 35% due to favorable tax rates associated with certain earnings from HP's operations in lower-tax jurisdictions throughout the world. HP has not provided U.S. taxes for all of such earnings because HP plans to reinvest some of those earnings indefinitely outside the United States. In the three and six months ended April30, 2010, HP recorded discrete items with a net tax benefit of $47million and $139million, respectively, decreasing the effective tax rate. These amounts included net tax benefits of $80million and $134million, respectively, from restructuring and acquisition charges; and net tax expense of $33million and net tax benefits of $5million, respectively, associated with adjustments to prior year foreign income tax accruals and credits, settlement of tax audit matters, a valuation allowance release, and other miscellaneous discrete items. In the three and six months ended April30, 2009, HP recorded discrete items with a net tax benefit of $46million and $138million, respectively, decreasing the effective tax rate. These amounts included net tax benefits of $56million and $120million, respectively, from restructuring and acquisition charges; and net tax expense of $10million and net tax benefits of $18million, respectively, associated with adjustments to prior year foreign income tax accruals and credits, settlement of tax audit matters, a valuation allowance release, and other miscellaneous discrete items. During the second quarter of fiscal 2010, the amount of gross unrecognized tax benefits remained at $1.9billion, of which up to $890million would affect HP's effective tax rate if realized. HP recognizes interest expense and penalties on unrecognized tax benefits within income tax expense. During the second quarter of fiscal 2010, there was no material change in the amount of accrued net interest and penalties. HP engages in continuous discussion and negotiation with tax authorities regarding tax matters in the various jurisdictions. HP does not expect complete resolution of any Internal Revenue Service ("IRS") audit cycle within the next 12months. However, it is reasonably possible that certain federal, foreign and state tax issues may be concluded in the next 12months, including issues involving transfer pricing and other matters. Accordingly, HP believes it is reasonably possible that its existing unrecognized tax benefits may be reduced by an amount up to $120million within the next 12months. HP is subject to income tax in the United States and over sixty foreign countries and is subject to routine corporate income tax audits in many of these jurisdictions. In addition, HP is

Stockholders' Equity

Stockholders' Equity
	6 Months Ended Apr. 30, 2010
Stockholders' Equity
Stockholders' Equity	Note14: Stockholders' Equity Share Repurchase Program HP's share repurchase program authorizes both open market and private repurchase transactions. In the three and six months ended April30, 2010, HP executed share repurchases of 35million shares and 88million shares, respectively. For the three months ended April30, 2010, repurchases of 35million shares were settled for $1.8billion. For the six months ended April30, 2010, repurchases of 89million shares were settled for $4.5billion, which included 3million shares repurchased in transactions that were executed in fiscal 2009 but settled in the first half of fiscal 2010. HP had approximately 2million shares repurchased in the second quarter of fiscal 2010 that will be settled in the third quarter of fiscal 2010. HP paid approximately $0.8billion in connection with repurchases of approximately 24million shares during the three months ended April30, 2009 and paid approximately $2.0billion in connection with repurchases of approximately 58million shares in the first six months of fiscal 2009. On November19, 2009, HP's Board of Directors authorized an additional $8.0billion for future share repurchases. As of April30, 2010, HP had remaining authorization of $7.4billion for future share repurchases. Comprehensive Income The changes in the components of OCI, net of taxes, were as follows: Three months ended April30 2010 2009 Inmillions Net earnings $ 2,200 $ 1,721 Net change in unrealized gains on available-for-sale securities: Change in net unrealized gains, net of tax of $4million in 2010 and $4million in 2009 7 11 Net unrealized gains reclassified into income with no tax effect in 2009 (1 ) 7 10 Net change in unrealized gains (losses) on cash flow hedges: Unrealized gains (losses) recognized in OCI, net of tax of $81million in 2010 and net of tax benefit of $106million in 2009 157 (198 ) Gains reclassified into income, net of tax of $73million in 2010 and $150million in 2009 (130 ) (280 ) 27 (478 ) Net change in cumulative translation adjustment, net of tax of $12million in 2010 and $202million in 2009 71 137 Net change in unrealized components of defined benefit plans, net of tax of $60million in 2010 and net of tax benefit of $4million in 2009 83 (15 ) Comprehensive income $ 2,388 $ 1,375 Six months ended April30 2010 2009 Inmillions Net earnings $ 4,450 $ 3,577 Net change in unrealized gains (losses) on available-for-sale securities: Change in net unrealized gains, net of tax of $5million in 2010 and with no tax effect in 2009 9 4 Net unrealized gains reclassified into income with no tax effect in 2009 (1 ) 9 3 Net change in unrealized gains (losses) on cash flow hedges: Unrealized gains (losses) recognized in OCI, net of tax of $238million in 2010 and net of tax benefit of $33million in 2009 447 (69 ) Gains

Retirement and Post-Retirement

Retirement and Post-Retirement Benefit Plans
	6 Months Ended Apr. 30, 2010
Retirement and Post-Retirement Benefit Plans
Retirement and Post-Retirement Benefit Plans	Note15: Retirement and Post-Retirement Benefit Plans Modifications to Defined Contribution Plans HP offers various defined contribution plans for U.S. and non-U.S. employees. As disclosed in our Consolidated Financial Statements for the fiscal year ended October31, 2009, prior to April1, 2009, HP matched employee contributions to the U.S. HP 401(k) Plan with cash contributions up to a maximum of 6% of eligible compensation for U.S. employees hired prior to August1, 2008 and up to a maximum of 4% of eligible compensation for U.S. employees hired on or after August1, 2008. Further, effective from January1, 2009 through March31, 2009, U.S. employees participating in the EDS 401(k) Plan were eligible for a 4% HP matching contribution on eligible compensation. Effective April1, 2009, HP matching contributions under both the U.S. HP 401(k) Plan and the EDS 401(k) Plan were changed to a quarterly, discretionary, performance-based match of up to a maximum of 4% of eligible compensation for all U.S. employees, which is determined each fiscal quarter based on business results. HP matching contributions vary from 0% to 100% of the maximum 4% match, based on such factors as quarterly earnings, market share growth, and performance relative to market and economic conditions. HP's matching contributions for the quarter ended April30, 2010 was 100% of the maximum 4% match. HP's net pension and post-retirement benefit costs were as follows: Three months ended April30 U.S. Defined Benefit Plans Non-U.S. Defined Benefit Plans Post- Retirement Benefit Plans 2010 2009 2010 2009 2010 2009 In millions Service cost $ $ 7 $ 82 $ 75 $ 3 $ 4 Interest cost 144 148 165 146 12 17 Expected return on plan assets (165 ) (133 ) (188 ) (158 ) (8 ) (8 ) Amortization and deferrals: Actuarial loss (gain) 7 (21 ) 53 14 5 2 Prior service benefit (3 ) (2 ) (22 ) (20 ) Net periodic benefit (gain) cost (14 ) 1 109 75 (10 ) (5 ) Settlement gain (1 ) Curtailment gain (13 ) (2 ) Special termination benefits 11 2 Net benefit (gain) cost $ (14 ) $ $ 120 $ 77 $ (23 ) $ (7 ) Six months ended April30 U.S. Defined Benefit Plans Non-U.S. Defined Benefit Plans Post- Retirement Benefit Plans 2010 2009 2010 2009 2010 2009 In millions Service cost $ $ 13 $ 168 $ 152 $ 6 $ 7 Interest cost 289 296 337 299 24 35 Expected return on plan assets (331 ) (266 ) (386 ) (323 ) (15 ) (16 ) Amortization and deferrals: Actuarial loss (gain) 14 (34 ) 109 34 10 3 Prior service benefit (5 ) (4 ) (43 ) (39 ) Net periodic

Litigation and Contingencies

Litigation and Contingencies
	6 Months Ended Apr. 30, 2010
Litigation and Contingencies
Litigation and Contingencies	Note16: Litigation and Contingencies HP is involved in lawsuits, claims, investigations and proceedings, including those identified below, consisting of intellectual property, commercial, securities, employment, employee benefits and environmental matters that arise in the ordinary course of business. HP records a provision for a liability when management believes that it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. HP believes it has adequate provisions for any such matters. HP reviews these provisions at least quarterly and adjusts these provisions to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular case. Based on its experience, HP believes that any damage amounts claimed in the specific matters discussed below are not a meaningful indicator of HP's potential liability. Litigation is inherently unpredictable. However, HP believes that it has valid defenses with respect to legal matters pending against it. Nevertheless, it is possible that cash flows or results of operations could be materially affected in any particular period by the unfavorable resolution of one or more of these contingencies or because of the diversion of management's attention and the creation of significant expenses. Litigation, Proceedings and Investigations Copyright levies. As described below, proceedings are ongoing or have been concluded involving HP in certain European Union ("EU") member countries, including litigation in Germany and Belgium, seeking to impose or modify levies upon equipment (such as multifunction devices ("MFDs"), personal computers ("PCs") and printers) and alleging that these devices enable producing private copies of copyrighted materials. The levies are generally based upon the number of products sold and the per-product amounts of the levies, which vary. Some EU member countries that do not yet have levies on digital devices are expected to implement similar legislation to enable them to extend existing levy schemes, while some other EU member countries are expected to limit the scope of levy schemes and applicability in the digital hardware environment. HP, other companies and various industry associations have opposed the extension of levies to the digital environment and have advocated alternative models of compensation to rights holders. VerwertungsGesellschaft Wort ("VG Wort"), a collection agency representing certain copyright holders, instituted legal proceedings against HP in June2001 in Germany relating to whether and to what extent German copyright levies for photocopiers should be imposed on MFDs. On July6, 2005, the Court of Appeals in Stuttgart Germany ordered HP to pay VG Wort levies based on the published tariffs for photocopiers in Germany (which range from 38.35 to 613.56 per unit), plus interest, on MFDs sold in Germany up to December2001, and the German Federal Supreme Court later affirmed that ruling on appeal. HP subsequently appealed the decision by filing a claim with the German Federal Constitutional Court, which declined to hear HP's appeal, thus

Segment Information

Segment Information
	6 Months Ended Apr. 30, 2010
Segment Information
Segment Information	Note17: Segment Information Description of Segments HP is a leading global provider of products, technologies, software, solutions and services to individual consumers, small and medium sized businesses ("SMBs"), and large enterprises including customers in the government, health and education sectors. HP's offerings span personal computing and other access devices; imaging and printing-related products and services; enterprise information technology ("IT") infrastructure, including enterprise storage and server technology and networking products; software that optimizes business technology investments; financial services including leasing; and multi-vendor customer services, including technology support and maintenance, consulting and integration, information technology and business process outsourcing services and application services. HP and its operations are organized into seven business segments for financial reporting purposes: Services, ESS, HP Software, PSG, IPG, HP Financial Services ("HPFS"), and Corporate Investments. HP's organizational structure is based on a number of factors that management uses to evaluate, view and run its business operations, which include, but are not limited to, customer base, homogeneity of products and technology. The business segments disclosed in the accompanying Consolidated Condensed Financial Statements are based on this organizational structure and information reviewed by HP's management to evaluate the business segment results. Services, ESS and HP Software are reported collectively as a broader HP Enterprise Business. In order to provide a supplementary view of HP's business, aggregated financial data for the HP Enterprise Business is presented herein. HP has reclassified segment operating results for fiscal 2009 to conform to certain fiscal 2010 organizational realignments. None of the changes impacts HP's previously reported consolidated net revenue, earnings from operations, net earnings or net earnings per share. Future changes to this organizational structure may result in changes to the business segments disclosed. A description of the types of products and services provided by each business segment follows. HP Enterprise Business. Each of the business segments within the HP Enterprise Business is described in detail below. Services provides consulting, outsourcing and technology services across infrastructure, applications and business process domains. Services is divided into four main business units: infrastructure technology outsourcing, applications services, business process outsourcing and technology services. Infrastructure technology outsourcing delivers comprehensive services that encompass the data center and the workplace (desktop); network and communications; and security, compliance and business continuity. HP also offers a set of managed services, providing a cross-section of its broader infrastructure services for smaller discrete engagements. Applications services help clients revitalize and manage their applications assets through flexible, project-based, consulting services and longer-term outsourcing contracts. These full lifecycle services e

Document and Entity Information

Document and Entity Information
	6 Months Ended Apr. 30, 2010	May. 31, 2010
Document and Entity Information
Entity Registrant Name	HEWLETT PACKARD CO
Entity Central Index Key	0000047217
Document Type	10-Q
Document Period End Date	2010-04-30
Amendment Flag	false
Current Fiscal Year End Date	--10-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		2,334,496,184
Document Fiscal Year Focus	2,010
Document Fiscal Period Focus	Q2