July 16, 2012

Sarabjit Cheema, BS 2011, NYU Stern

Disclaimer
THE INFORMATION CONTAINED IN THIS PRESENTATION IS FOR INFORMATIONAL AND EDUCATIONAL PURPOSES AND DOES NOT CONSTITUTUE A SOLICITATION, RECOMMENDATION OR OFFER TO BUY OR SELL ANY SECURITIES. THE VIEWS EXPRESSED HEREIN REPRESENT THE OPINION OF SARABJIT CHEEMA. SARABJIT CHEEMA MAY HAVE PERSONAL INVESTEMENTS IN THE COMPANIES DISCUSSED HEREIN. THE INFORMATION CONTAINED HEREIN IS BASED ON PUBLICLY AVAILABLE INFORMATION. THE COMPANIES INCLUDED IN THIS PRESENTATION MAY HAVE MATERIAL NON-PUBLIC INFORMATION IN THEIR POSSESSION AND CONSEQUENTLY, MAY DISAGREE WITH THE CONCLUSIONS SET FORTH BY SARABJIT CHEEMA. THIS PRESENTATION CONTAINS HISTORICAL AND ANTICIPATED OPERATING PERFORMANCE OF THE COMPANIES DISCUSSED IN THIS PRESENTATION, ACCESS TO CAPITAL MARKETS, MARKET CONDITIONS AND THE VALUES OF ASSETS AND LIABILITIES. ACTUAL RESULTS MAY VARY MATERIALLY FROM THE ESTIMATES AND PROJECTED RESULTS CONTAINED HEREIN. THIS PRESENTATION CONTAINS FORWARD-LOOKING STATEMENTS. THESE FORWARD-LOOKING STATEMENTS ARE BASED ON CURRENT EXPECTATIONS AND ASSUMPTIONS THAT ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY. ACCORDINGLY, YOU SHOULD NOT RELY UPON FORWARD-LOOKING STATEMENTS AS A PREDICTION OF ACTUAL RESULTS. SARABJIT CHEEMA MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY OR COMPLETENESS OF THE INFORMATION CONTAINED HEREIN. SARABJIT CHEEMA DISCLAIMS ANY DUTY TO PROVIDE ANY UPDATES OR CHANGES TO THE ANLAYSES CONTAINED HEREIN INCLUDING, WITHOUT LIMITATION, THE MANNER OR TYPE OF ANY INVESTMENT MADE BY SARABJIT CHEEMA.

Hewlett-Packard Company
Hewlett-Packard Company (HP or the Company) is a leading technology company Recent stock price: $18.81(1) Ticker: HPQ Serves individual consumers, small- and medium-sized businesses and large enterprises Comprised of five business units: PCs Services Printers Servers Software Market Capitalization of ~$37.2 billion(1) Enterprise Value of ~$59.4 billion(1)

(1)

As of July 16, 2012

Investment Highlights
A World Class Company
73 year old brand that is globally recognized #1 market position in almost every business segment

Improved Corporate Governance

Average tenure of board members is approximately 2.5 years

Activist investor Ralph Whitworth recently appointed to Board after accumulating a stake of ~1.5%
8 out of 11 board members are Independent Meg Whitman, CEO of HP, received performance-contingent stock options that vest only if HPs share price appreciates over a specified threshold

Favorable Industry Dynamics

Low PC penetration rates in emerging markets support long-term secular demand

Shift from analog to digital printing will result in significant growth in printable content Cloud computing presents tremendous growth opportunity

Investment Highlights
Shareholder Friendly Capital Allocation
Since 2005, $60 billion returned to shareholders through stock buybacks and dividends(1) $9.7 billion remaining for future share repurchases, representing 26% of HPs market capitalization(2)

Attractive Valuation
Trades at 4.3x 2013 estimated EPS(2)(3) After deducting the value of ESSN and Services, investors receive the PC, printer, and software businesses for free Free optionality on webOS Paid to wait dividend yield of 2.81%(2)

Note: Represents diluted EPS excluding extra items (1) Net of issuance of common stock under employee stock plans (2) As of July 16, 2012 (3) Source: Capital IQ

Snapshot of HP: More Than Just a PC Company

HP has leading market positions in all of its segments. The breadth and product diversity offered by HP is unrivaled by any of its competitors
FY 2011 Revenue By Segment Market Share FY 2011 Revenue By Region

#1

#2

#1

#1

N/A

N/A 6

Snapshot of HP: More Than Just a PC Company (Contd)

The market has been overly concerned with HPs PC business, which represents only 16.9% of pre-corp EBIT. Despite its low margins, the PC business provides HP with considerable economies of scale across its businesses
FY 2011 Operating Performance (1) Revenue PSG Services IPG ESSN HP Software HP Financial Services Corporate Investments Total $39,574 $35,954 $25,783 $22,241 $3,217 $3,596 $322 $130,687 EBIT $2,350 $5,149 $3,973 $3,026 $698 $348 ($1,616) $13,928 EBIT Margin 5.9% 14.3% 15.4% 13.6% 21.7% 9.7% -501.9% 10.7% ($ in millions) % Pre-Corp EBIT 16.9% 37.0% 28.5% 21.7% 5.0% 2.5% -11.6% 100%

(1)

FY 2011 financials exclude corporate overhead

Third Party Observations

Wall Street is significantly pessimistic on HP and has set very low expectations. No matter how bad the outlook is for an asset, when little or no optimism is incorporated in its price, it can easily be a bargain capable of providing outsized returns with limited risk - Howard Marks
..sustained weak or negative growth in printers, challenges in HPs high-end server business, and challenges in consumer PC growth due to competition from tablets and phones. Net, three of HPs businesses face growth challengesprinters, PCs, and enterprise, while HP services business, which has high exposure to hardware support and outsourcing will likely grow at or lower than global GDP - BMO Capital Markets (February 23, 2012) Tough road ahead as turnaround continues - Bank of America Merrill Lynch (February 22, 2012) Major Road Work Ahead: HP Stumbles on a Low Bar, and Turnaround Likely Involves More Bumps..company, secular, and macroeconomic-related risks stand to defer any measurable progress on the turnaround story. - JP Morgan (February 23, 2012) revenue shortfall in PCs and significant Q/Q margin deterioration in every business raise questions about the competitiveness, cost structure, and secular pressures in HPs business segments - Morgan Stanley (February 22, 2012)

A long and winding road may keep valuations compressedHPQ will likely have its ups and downs - Wells Fargo (June 27, 2012)
8

HPs Material Stock Price Underperformance

Since Mark Hurd resigned, HPs stock price has declined 52% and has materially underperformed the broader equity markets and its Peer Group Summary Returns
30%

YTD HP Stock Price Performance

Hewlett-Packard Company Dow Jones Index 2011 Proxy Peer Group(1) Hewlett-Packard relative to: Dow Jones Index 2011 Proxy Peer Group(1)

As of July 16, 2012 YTD 1 Year 2 Year -28.6% -45.2% -58.1% 2.7% 6.5% -31.2% -35.1% 2.8% 13.8% -47.9% -59.0% 26.0% 50.4% -84.1% -108.5%

15% 0% -15% -30% Jan-12

Feb-12 HPQ

Mar-12

Apr-12

May-12

Jun-12

Jul-12

Dow Jones Index

2011 Proxy Peer Group

Two-Year HP Stock Price Performance

100% 50% 0% 0% -50% -45% -100% Jul-10 Nov-10 HPQ Mar-11 Jul-11 Nov-11 Mar-12 Jul-12 -15% -30% 30% 15%

One-Year HP Stock Price Performance

-60% Jul-11

Sep-11 HPQ

Nov-11

Jan-12

Mar-12

May-12

Dow Jones Index

2011 Proxy Peer Group

Dow Jones Index

2011 Proxy Peer Group

Note: Total returns for all periods exclude dividends (1) HP 2011 Proxy Peer Group: CVX, GE, F, T, AAPL, VZ, IBM, PG, MSFT, BA, JNJ, DELL, UTX, INTC, CSCO, ORCL, GOOG, EMC

Business Overview

10

Personal Systems Group

Commentary
Provides commercial/consumer PCs, workstations, calculators and other related accessories, software, and services #1 PC brand globally Product life cycle tied to Windows, Intel/AMD, and design updates Commodity product where brand, service, and features are key differentiators Competitors:
$ in millions PSG Revenue % Growth EBIT % Margin % of HP Revenues % of HP pre-corp EBIT

Financials
FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 LTM $29,166 $36,409 $42,295 $35,305 $40,741 $39,574 $38,035 24.8% 16.2% -16.5% 15.4% -2.9% -3.9% $1,152 $1,661 $2,375 $1,661 $2,032 $2,350 $2,133 3.9% 4.6% 5.6% 4.7% 5.0% 5.9% 5.6% 32% 14% 35% 16% 36% 19% 31% 12% 32% 13% 31% 17% 31% 18%

Windows 8 upgrade cycle, back-to-school, rebalancing of HDD supply, and holiday shopping provide significant tailwinds in 2H12 and beyond

11

Personal Systems Group (Contd)

HP has the largest revenue base and has successfully leveraged its scale to produce industry leading margins Many competitors undercutting on price to drive market share and volume gains (i.e. Lenovo) Usually an unsustainable model especially when larger rivals have greater financial resources (i.e. HP and Dell) By taking advantage of its size, producing innovative products, and reducing SKUs, HP can increase margins by at least 40 bps Achieved 5.9% margins in FY 2011
LTM REVENUE GROWTH

RELATIVE SIZE - LTM REVENUES

($ in billions)

RELATIVE EBIT MARGINS

$38.0 $33.2 $29.5 $23.0 37.0%

5.6% 4.8%

3.2% $15.6 $13.5 $10.4 14.0% 5.8% 0.6%

2.1%

2 -0.4% -1.2% 3 -3.9%

-1.8%
Source: Capital IQ, Company Filings (1) Represents as reported Client segment revenue and operating margin for FY 2012 (2) Represents as reported net sales by product for desktops and portables (3) Represents as reported Personal Computer segment revenue and operating margin

-22.6%

12

Services
Commentary
Provides consulting, outsourcing and technology services #2 in services Cross-selling opportunities to market hardware and software Competitors:
$ in millions Services Revenue % Growth EBIT % Margin % of HP Revenues % of HP pre-corp EBIT

Financials
FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 LTM $15,578 $15,329 $20,977 $35,380 $35,529 $35,954 $35,966 -1.6% 36.8% 68.7% 0.4% 1.2% 0.0% $1,557 $1,782 $2,518 $5,102 $5,661 $5,149 $4,298 10.0% 11.6% 12.0% 14.4% 15.9% 14.3% 12.0% 17% 19% 15% 17% 18% 20% 31% 38% 28% 36% 28% 37% 29% 36%

13

Services (Contd)
Services segment drives favorable recurring revenue stream as HPs typical average outsourcing contract life is approximately 5 years(1) EDS integration still in early innings Phase one of integration focused on streamlining costs through headcount reduction Only 30 of EDSs top 300 accounts had overlapped with HPs top 100 accounts at the time of acquisition (1) Significant opportunity for HP to close the margin gap by focusing on higher margin contracts and realize revenue synergies from EDS acquisition Achieved 15.9% margins in FY 2010

RELATIVE SIZE - LTM REVENUES

($ in billions)

LTM REVENUE GROWTH

14.3%

RELATIVE EBIT MARGINS

15.2% 13.9% 12.0%

$62.2

$36.0 $27.7

8.5%

$15.9

$8.3 0.1%
2 3 3

1.3% 0.0%
2
2

-1.0%
Source: Capital IQ, Company Filings (1) Source: Sitfel, August 7, 2009 (2) Represents as reported Global Services segment revenue and operating margin (3) Represents as reported Services segment revenue for FY 2012

14

Imaging and Printing Group

Commentary
Provides consumer and commercial printer hardware, supplies, media and scanning devices
$ in millions IPG Revenue % Growth EBIT % Margin % of HP Revenues % of HP pre-corp EBIT

Financials
FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 LTM $26,786 $28,609 $29,614 $24,011 $25,764 $25,783 $24,599 6.8% 3.5% -18.9% 7.3% 0.1% -4.6% $3,978 $4,293 $4,559 $4,310 $4,412 $3,973 $3,287 14.9% 15.0% 15.4% 18.0% 17.1% 15.4% 13.4% 29% 48% 27% 42% 25% 36% 21% 32% 20% 28% 20% 29% 20% 27%

#1 in imaging and printing globally

Supply revenue provides stable, recurring revenue base Medium to high switching costs depending on lease structure and size of capital investment by customers Results in high customer attachment rate Competitors:

15

Imaging and Printing Group (Contd)

The preferred choice of small and medium size businesses Yen appreciation pressuring margins Recently merged with the PSG group, providing further opportunity to increase installed base through cross-selling Significant opportunity for HP to close the margin gap by eliminating costs and redundancies through merger with PSG group Achieved 18.0% margins in FY 2009
LTM REVENUE GROWTH

RELATIVE SIZE - LTM REVENUES

($ in billions)

RELATIVE EBIT MARGINS

$24.6

13.4% $24.1

13.3% 11.2% 11.1%

-0.9%
3

-1.4%

-1.5%
2

-1.8%
1

6.5%

$10.1

$4.1

$4.1

-4.6%
1 2 3 1 2 3

Source: Capital IQ, Company Filings (1) Represents as reported Office segment revenue and operating margin (2) Represents as reported Technology segment revenue and operating margin (3) Represents as reported Printing and Solutions segment revenue and operating margin

16

Enterprise Servers, Storage and Networking

Commentary
Provides server, storage and networking products #1 in industry-standard servers Converged infrastructure and cloud computing key areas of growth Oracles decision to discontinue software development for HPs Itanium-based servers has contributed to revenue decline Creating undue uncertainty amongst HP customers Competitors:
$ in millions ESSN Revenue % Growth EBIT % Margin % of HP Revenues % of HP pre-corp EBIT

Financials
FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 LTM $17,211 $18,639 $19,400 $16,121 $20,356 $22,241 $21,355 8.3% 4.1% -16.9% 26.3% 9.3% -4.0% $1,557 $2,148 $2,577 $1,657 $2,825 $3,026 $2,583 9.0% 11.5% 13.3% 10.3% 13.9% 13.6% 12.1% 19% 19% 18% 21% 16% 20% 14% 12% 16% 18% 17% 22% 17% 21%

17

Enterprise Servers, Storage and Networking (Contd)

HP is the leader in industry standard servers 3Par, a subsidiary of HP, is growing at over 100% Converged infrastructure and average refresh cycle of 3.5 years to propel future growth

RELATIVE SIZE - LTM REVENUES

($ in billions)

LTM REVENUE GROWTH

RELATIVE EBIT MARGINS

18.4%

$21.4

$20.5 $19.5

21.7%

12.1%

12.1%

15.6% $10.3 7.2% $6.2 3.8%

-1.8%
1

-4.0%

Source: Capital IQ, Company Filings (1) Represents as reported Systems and Technology segment revenue and operating margin (2) Represents as reported Servers and Networking segment revenue for FY 2011

18

Software
Commentary
Provides enterprise IT management software, information management solutions and security intelligence/risk management solutions Potential to leverage enterprise customer base and provide software services Higher margin relative to product-oriented business segments
$ in millions HP Software Revenue % Growth EBIT % Margin % of HP Revenues % of HP pre-corp EBIT

Financials
FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 $1,437 $3,628 $4,220 $2,655 $2,729 $3,217 152.5% 16.3% -37.1% 2.8% 17.9% ($17) $248 $499 $731 $782 $698 -1.2% 6.8% 11.8% 27.5% 28.7% 21.7% 5% 0% 10% 2% 10% 4% 8% 5% 7% 5% 8% 5% LTM $3,611 12.2% $754 20.9% 9% 6%

Predictable, recurring revenue

Competitors:

19

Software (Contd)
Acquisition accounting requires Autonomys deferred revenue balance to be written-off over the first two quarters of ownership In 2H12, operating margins expected to improve significantly as deferred revenue write-down overhang ends HP can increase margins by at least 800 bps Achieved 28.7% margins in FY 2010
LTM REVENUE GROWTH

RELATIVE SIZE - LTM REVENUES

($ in billions)

RELATIVE EBIT MARGINS

$28.5

12.2%

35.7%

30.1%
25.0% 20.9% 17.0%

8.7%

8.7%

5.2%

$6.7 $4.8 $3.6 $2.2 1.1%

Source: Capital IQ, Company Filings (1) Represents as reported Software segment revenue and operating margin

20

HP Financial Services
Commentary
HP Financial Services offers leasing, financing, utility programs and asset recovery services Competitors: Banks and competitors with financing companies
$ in millions HP Fin. Services Revenue % Growth EBIT % Margin % of HP Revenues % of HP pre-corp EBIT

Financials
FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 $2,078 $2,336 $2,698 $2,673 $3,047 $3,596 12.4% 15.5% -0.9% 14.0% 18.0% $147 $155 $192 $206 $281 $348 7.1% 6.6% 7.1% 7.7% 9.2% 9.7% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 3% 2% LTM $3,802 5.7% $373 9.8% 3% 3%

21

Corporate Investments
Commentary
HP Corporate Investments includes intelligence solutions, HP Labs, webOS software and certain business incubation software Also derives revenue from licensing specific HP technology to third parties
$ in millions Corp. Investments Revenue % Growth EBIT % Margin % of HP Revenues % of HP pre-corp EBIT

Financials
FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 LTM $566 $762 $965 $191 $346 $322 $294 34.6% 26.6% -80.2% 81.2% -6.9% -8.7% ($151) ($57) $49 ($300) ($366) ($1,616) ($1,336) -26.7% -7.5% 5.1% -157.1% -105.8% -501.9% -454.4% 1% -2% 1% -1% 1% 0% 0% -2% 0% -2% 0% -12% 0% -11%

22

Competitors Relative To HP
The breadth and product diversity offered by HP is unrivaled by any of its competitors. While continuous innovation is required to stay competitive, HPs financial resources and dominant market share make the Company well positioned relative to competitors. Most competitors have:
Lower sales and margins Weak market share Limited product diversity

23

HP webOS: Overlooked and Underappreciated

24

The Beginnings of webOS

Source: The Verge (June 5, 2012)

25

The Resurrection
Whitman decides to keep webOS alive by making it open source. By contributing webOS to the open source community, HP can accelerate the platforms development

Source: The Verge (June 5, 2012)

26

webOS Can Become a Key Differentiator for HP

Google Microsoft Apple Research In Motion

With Nokia abandoning its Symbian OS, there are currently four operating systems in the marketplace: RIMMs Blackberry, Apples iOS, Googles Android, and Microsofts recently released Windows 8 Only Apple and Research In Motion are involved in software and hardware with respect to their products But bigger players are entering the hardware space to replicate Apples success, and posing significant challenges to the historical software and OEM relationship Googles acquisition of Motorola Mobility Microsofts preview of the Surface tablet

Fortunately for HP, the Palm acquisition addresses its software needs and provides it with a formidable operating system for its existing products

27

webOS: A Significant Value Proposition

We didn't buy Palm to be in the smartphone business. And I tell people that, but it doesn't seem to resonate well. We bought it for the IP. The WebOS is one of the two ground-up pieces of software that is built as a web operating environment...We have tens of millions of HP small form factor web-connected devices...Now imagine that being a web-connected environment where now you can get a common look and feel and a common set of services laid against that environment. That is a very valuable proposition. Mark Hurd

28

webOS Versus Other Platforms

Type

Kernel

Multitasking

Source Type
29

Source: gdgt

webOS Versus Other Platforms (Contd)

Ease of Use:

30
Source: gdgt

Third Party Observations on webOS

The key differentiator with webOS is that the apps keep running in the background, true multitasking. To this day iOS, Android, and Windows Phone still do not have true multitasking at the application levelTo this day, I and many others believe that webOS has the best and least unobtrusive notification system (looking at you iOS) and at the same time it has to feel alive The Verge (June 15, 2012) Likely one of the best features of webOS is Just Type, a universal search system... its actually rather similar to Spotlight on iOSThough, the similarities stop there. It is much powerful than that. The Verge (June 15, 2012) around the web all of the people stating that webOS is the best mobile operating system ZDNet (August 22, 2011) We hadn't considered that there might be an intuitive yet un-Apple way to use a smartphone. Using it felt natural in ways that Android never would, and full-featured in ways that the iPhone didn't, at the time--multitasking made sense, notifications made sense, gestures made sense. POPSCI (August 18, 2011) Apples iOS 5 notifications are great, but webOS is still better BGR (June 8, 2011) This isnt just a good OS, its a great OS - Engadget (October 19, 2010)

webOS provides the best user experience and is a superior operating system relative to current market offerings. If HP can leverage webOS successfully, the opportunity is tremendous
31

A Preview of What to Expect

32

Chronic Mismanagement

33

Early 2000s: HP Begins to Decline

During Carly Fiorinas tenure at HP, total shareholder return was -49%
Under Fiorina (1999-2005), HP pursued a growth at all costs strategy Between 2000 and 2005, EBIT margins declined 260 bps while sales increased by 1.8x The companys leverage and financial profile weakened following the acquisition of Compaq
HP SHARE PRICE PERFORMANCE
60% 40% 20% 0% -20% -40%

-60%
-80% -100% 1999

2000

2001

2002

2003

2004

Source: Capital IQ, Yahoo Finance Note: Total shareholder return excludes dividends

34

Late 2000s: Saved From Financial Distress

During Mark Hurds tenure at HP, total shareholder return was 145%
Fiorina was forced out; Mark Hurd was hired in 2005 Performance under Hurd improved considerably as cost-cutting initiatives made HP leaner Consolidated 85 data centers into 6 Consolidated 6,000 company used software applications into 1,500 EBIT increased by 2.2x while revenue increased 1.5x
HP SHARE PRICE PERFORMANCE
200% 180% 160% 140% 120% 100% 80% 60% 40% 20% 0% 2005 2006 2007 2008 2009 2010

Source: Yahoo Finance Note: Total shareholder return excludes dividends

35

Late 2000s: Sex Scandal Forces Hurd Out

During Leo Apothekers tenure at HP, total shareholder return was -46.3%

Leo Apotheker replaced Hurd as CEO in 2010 and failed to deliver at HP

Poor Decision Making Despite being the worlds top personal computer maker, Apotheker contemplated spinoff of PC business HP spent $1.2 billion to acquire Palm and its highly praised webOS, which was nearly shutdown and discontinued during the end of Apothekers tenure as CEO Poor Capital Stewardship Autonomy transaction valued at 25.2x LTM EBITDA Poor Execution Slashed sales outlook three times Nearly every business segment suffered either a decline in sales or margin contraction

HP SHARE PRICE PERFORMANCE

20% 10% 0%

Fortunately, the departure of Hurd and HPs recent poor stewardship of capital under Apothekers watch are temporary and solvable setbacks

-10%
-20% -30% -40%

-50%
-60% Nov-10
Source: Yahoo Finance Note: Total shareholder return excludes dividends

Feb-11 HP

May-11

Aug-11

36

Why Hiring of Leo Apotheker Was a Poor Decision

During Leo Apothekers tenure as CEO of SAP, total shareholder return was only 0.9%
Competitor Oracle outperformed SAP by growing revenue 3.7% in FY 2009 while SAPs revenue declined 7.8% First revenue decline posted by SAP since 2003 Apothekers 2 year tenure as CEO of SAP comes to end after dismal performance
SAP SHARE PRICE PERFORMANCE FY 2009 REVENUE COMPARISON

40% 30%

20%
10% 0%

3.7%

-10%
-20% -30%

-40% Mar-07

Sep-07

Mar-08

Sep-08
SAP

Mar-09

Sep-09

-7.8%

Source: Yahoo Finance, Capital IQ Note: Total shareholder return excludes dividends

37

HP Has Been Chronically Mismanaged

Over the past 13 years, HP has failed to create value for shareholders
$70 $60 $50 $40

$30
$20

$10
$1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

CEO:

Fiorina

Hurd

Leo

Source: Yahoo Finance Note: Total shareholder return excludes dividends

38

Improved Corporate Governance

39

Whitman Hired as Apothekers Replacement

During Meg Whitmans tenure at EBAY, total shareholder return was 1662% or 34.4% compounded annually
MBA, Harvard Business School Has held management positions at The Walt Disney Company, FTD, Inc., The Procter & Gamble Company, The Stride Rite Corporation, Bain & Company, and Hasbro, Inc. Joined EBAY in 1998, which had revenue of $4 million and only 30 employees By 2008, EBAY had revenue of $8 billion and 15,000 employees

Source: Google Finance Note: Total shareholder return excludes dividends

40

And Incentivized to Create Shareholder Value

Meg Whitman will receive $1.00 in base salary and 1,900,000 options at an exercise price of $23.59 which will have an eight-year term For the options to vest in full, the following criteria must be met: 100,000 shares will vest, if at all, on each of the first three anniversaries of the option grant date, subject to Ms. Whitmans continued employment; 800,000 shares will vest, if at all, upon the satisfaction of both of the following criteria prior to the expiration of the option: (i) Ms. Whitmans continued employment on the first anniversary of the option grant date, and (ii) subject to Ms. Whitmans continued employment on such date, the first date that the closing price of HP common stock on the New York Stock Exchange has met or exceeded 120% of the exercise price of the option for at least 20 consecutive trading days; and 800,000 shares will vest, if at all, upon the satisfaction of both of the following criteria prior to the expiration of the option: (i) Ms. Whitmans continued employment on the second anniversary of the option grant date, and (ii) subject to Ms. Whitmans continued employment on such date, the first date that the closing price of HP common stock on the New York Stock Exchange has met or exceeded 140% of the exercise price of the option for at least 20 consecutive trading days.

Meg Whitman has a strong interest in seeing HPs stock recover

Source: Company Filings

41

Improved Corporate Governance

HPs significant underperformance was primarily due to poor corporate governance. The appointment of activist investor Ralph Whitworth, who has accumulated a 1.5% stake in HP, highlights that the new Board is receptive to engaging with shareholders to create value
Marc Andreessen Independent Director Shumeet Banerji Independent Director Rajiv Gupta Independent Director HP Board: 3 Years Co-Founder of AH Capital Management, LLC HP Board: 1 Year CEO of Booz & Company HP Board: 3 Years Chairman, Avantor Performance Materials Senior Advisor to New Mountain Capital, LLC Former Chairman and CEO of Rohm and Haas Company HP Board: 7 Years Chairman, President, and CEO of McKesson Corporation HP Board: 2 Years Chairman of HP Managing Partner at Kleiner Perkins Caufield & Byers Former President and COO of Oracle Corporation Former Senior Partner at Booz Allen Hamilton Former division VP at EDS Ann Livermore Non-Independent Director Gary Reiner Independent Director HP Board: 1 Year Former Executive VP of Enterprise Business at HP HP Board: 1 Year Special advisor to General Atlantic Former Senior VP and CIO of General Electric Company HP Board: 1 Year Former CEO of Alcatel-Lucent HP Board: 6 Years Principal of Aquiline Capital Partners LLC Former Chairman, President and CEO of Wachovia Corporation HP Board: 1 Year President and CEO of HP Former advisor to Kleiner, Perkins, Caulfield & Byers Former President and CEO of EBAY HP Board: 1 Year Principal of Relational Investors LLC

Patricia Russo Independent Director G. Kennedy Thompson Independent Director

John Hammergren Independent Director Raymond Lane Non-Independent Director

Margaret Whitman Non-Independent Director

Ralph Whitworth Independent Director

Source: Company Filings

42

Most Board Members Have Extensive Board Experience

Most HP Board members have experience on other company boards
BOARD EXPERIENCE Marc Andreessen
Ning Facebook eBay Kno, Bump Technologies CollabNet Opsware Octopus Albridge Solutions Kontiki Aliph Glam Media Quadrangle Capital Partners Skype Global Mixed Media Labs TinyCo Tyco International Symphony IRI Group Delphi Automotive The Vanguard Group The Conference Board Stroz Friedberg Affle

BOARD EXPERIENCE
Raymond Lane
Marimba Quest Software Elance Enigma Visible Path Corporation Virsa Systems Xsigo Systems Vertica Systems MEVIO GreatPoint Energy Luca Technologies AREVA Solar Fisker Automotive Hara Software Next Autoworks Company Aquion Energy Kenandy United Parcel Service Genpact Appirio

BOARD EXPERIENCE G. Thompson

BNC Bancorp The Clearing House The CharlotteMecklenburg Hospital Authority Strategic Growth Bancorp

Meg Whitman

eBay Foundation Procter & Gamble DreamWorks Rosewood Capital Zipcar ArcSight Zaarly
Electronic Arts Sovereign Bank ArcSight Apira Healthcare Group Genzyme Corporation Mattel Sirius Satellite Radio Sprint Nextel Corporation Tektronix Waste Management Wilshire Technologies

Ralph Whitworth

Rajiv Gupta

Ann Livermore Gary Reiner

John Hammergren

McKesson Corporation NADRO Verispan

Patricia Russo

General Motors Lucent Technologies Avaya Merck & Co. Alcoa

Source: Company Filings

43

PC Industry Overview

44

PCs Can Coexist With Tablets and Smartphones

Different devices for different situations. Tablets and smartphones provide greater mobility, but cannot replace the functionality and power of a PC

we think computers are here to stay and will play a big important role, along with the tablet, along with the cell phone. - Ronald Sargent, CEO of Staples (May 16, 2012)
Source: Google Thoughts on Mobile (February 7, 2012)

45

Daily Search Usage Trend By Platform

Desktop usage peaks during the work hours and declines steadily in the evening. Highly unlikely that tablets or smartphones will supplant desktop usage

Source: Google Thoughts on Mobile (February 7, 2012)

46

Historical PC Unit Sales

In the past 12 years, PC unit sales have declined only once. During the 2001-2002 U.S. recession, PC sales took one year to return to strong growth. During the 2008-2009 global recession, PC unit sales did not decline despite global growth concerns
400 350 300 250 200 150 100
-4.9% 3.4% 1.2% 0.5% 18.7% 15.6% 13.3% 11.9% 9.6% 11.4% 14.7%

Recession

27.6%

Recession

30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% -5.0% -10.0%

50 0 2000 2001 2002 2003 2004 2005 PC Units (MM) 2006 2007 YOY Growth 2008 2009 2010 2011

Source: Gartner

47

Emerging Markets to Drive Future Demand

PC penetration in emerging markets is significantly lower than developed economies, providing the PC industry with strong growth fundamentals

Source: Intel Morgan Stanley Technology, Media & Telecom Conference 2012 (February 17, 2012)

48

Emerging Markets to Drive Future Demand (Contd)

PC sales are expected to grow in the high single digits as first time buyers in emerging markets drive demand

Source: IDC

49

Notebooks Are Not Dying

Notebooks will be primary driver of PC growth as consumers favor mobility

Source: NPD DisplaySearch Quarterly Mobile PC Shipment and Forecast Report

50

PC Margins to Expand in 2H12

Thailand floods caused a shortage of hard drives which contributed to a shortfall in PC shipments. Average selling price for hard drives expected to decline in 2H12 as supply shortage eases
ASP (HDD)
$80 $69 $70 $60 $50 $40 $30 $20 $10 $0 Q4 FY08
Source: Western Digital

$68

$56 $53 $51 $50 $52 $48 $49 $51 $47 $46 $47 $45 $44 $46

Q1 FY09

Q2 FY09

Q3 FY09

Q4 FY09

Q1 FY10

Q2 FY10

Q3 FY10

Q4 FY10

Q1 FY11

Q2 FY11

Q3 FY11

Q4 FY11

Q1 FY12

Q2 FY12

Q3 FY12

51

Global PC Market Share By Units

HP has dominated the PC market for the past six years and has 42% more market share than its nearest competitor

100.0%

80.0%
55.4% 51.2% 49.0%

47.4%

47.5%

48.3%

60.0%

40.0%

5.8% 7.0% 15.9%

8.9% 7.4%

11.1% 7.2%

13.0% 8.1%

12.0%

11.2% 11.2%

9.7%

20.0%
15.9%

18.2%

18.4%

19.3%

17.9%

17.2%

14.3%

14.3%

12.2%

12.9%

12.1%

0.0%

2006

2007

2008

2009

2010

2011

Dell

HP

Lenovo

Acer

All Others

Source: Gartner

52

Printer Industry Overview

53

Key Market Trends

(1) (2)

IDC Diverse and Exploding Digital Universe, HP internal analysis HP internal analysis

54

Key Market Trends (Contd)

(1) (2)

IDC Diverse and Exploding Digital Universe, HP internal analysis HP internal analysis

55

Digital Printable Content Exploding

(1)

IDC The Diverse and Exploding Digital Universe (March 2008), HP internal analysis

56

Analog Pages Will Increasingly Tip to Digital Over The Next Decade

(1)

HP internal analysis

57

HP Global Printer Market Share By Units

HP has dominated the printer market and maintained the #1 market share for half a decade

60%

43% 41%

43%
41%

43%

40%

20%

0%
2006 2007 2008 2009 2010

Source: Credit Suisse (March 16, 2011)

58

Server Industry Overview

59

Public Cloud Expected to Reach Nearly $160 Billion By 2020

Cloud computing provides the biggest opportunity for growth and will drive increased server demand

Source: Forrester Research

60

So Lets Check Whos Best Posed to Benefit

1
For 10 consecutive years, 40 straight quarters, HP is the #1 vendor in worldwide server shipments with a 34.6% total unit shipment share HP shipped more than 684,000 servers in 1Q12 which was 180,000 more servers than Dell, 2.6 times as many servers as IBM, 7.9 times as Fujitsu, 16.8 times as many as Cisco and 24.0 times as many as Oracle HP shipped a server every 11 seconds and shipped more than 1 in every 3 servers customers purchased worldwide

HP is the #1 vendor in worldwide server revenue with a 29.3% total revenue share In terms of total revenue share, HP is 2.0 percentage points ahead of #2 IBM and 13.7 percentage points ahead of #3, Dell

HP has a commanding lead in the total blade server market, with a 46.1% revenue share. HP has led the blade server market for 22 consecutive quarters, 5 1/2 years HP shipped 2.3 times as many blades as IBM, 4.2 times as many as Dell and 4.4 times as many as Cisco

For 16 consecutive years, 64 quarters, HP ProLiant is the x86 server market share leader in both factory revenue and units HPs x86 revenue share, 35.3%, was 13.5 percentage points higher than its nearest competitor, Dell, 20.1 percentage points higher than IBM and 31.3 percentage points higher than Cisco

Source: Hewlett-Packard Company

61

So Lets Check Whos Best Posed to Benefit (Contd)

5
HP is the number one supplier of Itanium (EPIC) based systems based on worldwide unit volume and worldwide factory revenue HP Integrity blades maintained the #1 position in revenue for the RISC+EPIC blade segment with 59.0% worldwide share

HP is #1 in Windows revenue and units worldwide HP has a commanding 38.3% revenue share of the Windows market and leads over the nearest competitor, Dell, by 14.7 percentage points

HP is #1 in Linux revenue, 28.4%, and units, 30.7% In terms of Linux revenue share, HP leads over IBM by 10.8 percentage points and Dell by 10.3 points

For the three major operating environments UNIX, Windows and Linux combined (representing 99.9% of all servers shipped worldwide), HP is number one worldwide in server unit shipments
HP holds a 34.6% unit market share worldwide, which is 9.1 percentage points higher than #2 Dell

Source: Hewlett-Packard Company

62

Valuation

63

Technology Comparison Current Trading Multiple

Despite being among the leaders in its respective industry, HPs trading multiple is at a steep discount to most technology companies
P/E MULTIPLE

20.1x 18.1x 17.4x 17.0x 15.0x 14.8x 14.0x 13.8x 13.5x 12.0x

Average = 13.2x

8.5x

8.1x 7.3x 7.0x 5.2x

EMC

NTAP

FJTSY

BMC

ACN

AAPL

CAJ

IBM

CA

CSCO

SYMC

XRX

HPQ

DELL

LXK

Note: As of 07/16/2012 Source: Google Finance

64

Opportunity For Multiple Expansion

HP is trading at historical lows despite being significantly larger as measured by revenues coupled with improved operating performance
HISTORICAL P/E MULTIPLE
45.0x

40.0x

35.0x

30.0x

25.0x

20.0x

Average = 16.5x

15.0x

10.0x

5.0x

7.3x

0.0x Jan-05

Jul-05

Jan-06

Jul-06

Jan-07

Jul-07

Jan-08

Jul-08

Jan-09

Jul-09

Jan-10

Jul-10

Jan-11

Jul-11

Jan-12

Jul-12

Note: As of 07/16/2012 Source: Capital IQ

65

What is HP Worth?
The mid case valuation is $52.99/share, which is up 282% from the recent share price of $18.81. If revenues grow at 1.0% CAGR for the next several years, year end 2015 value per share is $36, driven largely by cost savings and share repurchases
Base
HP EPS Build LTM Revenue % - CAGR 2015 Revenue EBIT Margin Pro Forma EBIT Interest Expense and Other, net Taxes(1) Net Income Common Shares Outstanding(2) Pro Forma EPS Multiple Price @ Multiple % Return 3 Year IRR 4 Year IRR 5 Year IRR $124,040 1.0% $127,799 7.4% $9,138 ($986) ($2,038) $6,114 1,682 $3.64 10.00x $36.36 93% 25% 18% 14%

Mid
$124,040 1.3% $128,750 8.8% $10,887 ($986) ($2,475) $7,426 1,682 $4.42 12.00x $52.99 182% 41% 30% 23%

High
$124,040 1.5% $129,706 10.2% $12,636 ($986) ($2,913) $8,738 1,682 $5.20 14.00x $72.75 287% 57% 40% 31%

(1) (2)

Assumes 25% tax rate Assumes HP repurchases 298.5 million shares under authorized share repurchase program at an average price of $32.50

66

Sum of the Parts Valuation

ESSN

IPG

Services

($ in millions)

Comparables

10.0x 8.4x 8.0x 6.0x 4.0x 2.0x 0.0x

10.0x 8.0x 6.0x 4.0x 2.0x 0.0x

9.2x 7.9x

10.0x 8.2x 8.0x 6.0x 4.0x 2.0x 0.0x

Segment LTM EBIT

$2,583 8.4x $21,723

$3,287 8.6x(1) $28,268

$4,298 8.2x $35,244

67

Multiple Total Value

Note: Comparable multiples as of July 15, 2012 Source: Capital IQ, Company Filings (1) Average multiple of IPG comparables group

Buy 2, Get 3 Free

The combined value of ESSN and Services after deducting net debt and minority interest is $20.68, implying significant margin of safety as investors receive the PC, printer, and software businesses for free
$70.00

$60.00

$7.33(1) $20.95 +

($13.19)

$50.00

+ = $44.81

$40.00

+ $16.81
$30.00

$20.00

> + $12.92

$18.81(2)

$10.00

$0.00 ESSN IPG Services Margin Improvement Net Debt + Minority HPQ Value excl. PC & Interest Software HPQ Stock Price

Note: Assumes HP repurchases 298.5 million shares under authorized share repurchase program at an average price of $32.50 and excludes allocation of corporate overhead (1) Assumes ESSN, IPG, and Services segment operating margins improve by 89 bps, 229 bps, and 199 bps, respectively (2) As of July 16, 2012

68

Conclusion
HP is in good businesses with attractive characteristics However, sentiment is poor because PC and printer industries are misunderstood HPs defensible market position in nearly every business segment is tough to question The current stock price is not factoring in cost savings from the announced restructuring plan and potential earnings accretion from future share repurchases Share price underperformance has been a result of poor corporate governance which is being addressed Even if no margin expansion occurs beyond cost savings from announced restructuring, downside is limited Investors receive PC, printer, and software businesses for free Minimal financial leverage Cheap stock Upside potential is enormous through multiple expansion largely due to improvement in: Margins Corporate Governance Perception

69