Dear Fellow Stockholders, Fiscal 2008 was a strong year with some notable accomplishments. We have prepared HP to perform well and are building a company that can deliver meaningful value to our customers and stockholders for the long term. Looking ahead, it is important to separate 2008 from 2009, and acknowledge the difficult economic landscape. While we have made much progress, there is still much work to do.

2008—Solid Progress and Performance in a Tough Environment
With the acquisition of Electronic Data Systems Corporation (EDS), we continued implementing a multi-year strategy to create the world’s leading technology company. Additionally, we made solid progress on a number of core initiatives, including the substantial completion of phase one of HP’s information technology transformation.

Fiscal 2008 was also a difficult year, during which economic conditions deteriorated. HP proved our ability to execute in a tough environment.

In 2008, HP delivered:
• Net revenue growth of 13 percent, or 8 percent in constant currency, to $118.4 billion
• GAAP operating profit of $10.5 billion
• GAAP diluted EPS of $3.25, up from $2.68 in the prior year
• Non-GAAP operating profit of $11.8 billion
• Non-GAAP diluted EPS of $3.62, up from $2.93 in the prior year

HP gained share in key segments, while continuing to show discipline in our pricing and promotions. Software, services, notebooks, blades and storage each posted double-digit revenue growth, highlighting both our market-leading technology and improved execution. Technology Services showed particular strength with double-digit growth in revenue for the year and improved profitability.

Download HP Annual Report 2008

PDF format, 1.2MB, 183Pages.

Looking Ahead: Long-term Opportunity; Near-term Challenges
In the long term, we see extraordinary opportunities for HP. The amount of information on the planet is exploding. It has been estimated that the digital data-set doubles every 18 months. All of that information needs to be captured, stored, processed, shared, printed and viewed. Consumers need always on, always connected access to the data that is increasingly central to their lives. Enterprises are straining to meet ever-growing demand with aging, complex, proprietary and inefficient IT infrastructures.

These dynamics are creating a massive disruption in the IT marketplace and a massive opportunity for HP. With a comprehensive portfolio of hardware, software and services, HP is well positioned to help customers manage and transform their IT environments.

In the near term, we expect that economic conditions in 2009 will be extremely challenging. It will take continued discipline and tough decision making to stay the course and continue executing our strategy in the coming months.

However, our company has significant competitive advantages:
• A strong balance sheet
• Diversified revenues with one-third of our revenue and well over half of our profits from recurring sources such as services and supplies
• A lean, variable cost structure and commitment to continue to eliminate all costs that are not core to the company’s success
• Proven financial and operational discipline

These advantages will be put to good use by our outstanding executive leadership team. We will continue to make strategic investments for the future in sales coverage, opportunistic acquisitions, research and development, and customer service and support. Our plan is to get through this period without losing any muscle in the organization or changing our swing in the marketplace.

Great companies rise to the top in tough times, and I believe HP is one of the best. We expect that HP’s ability to execute in a challenging marketplace will differentiate us from our competitors and enable HP to emerge from the current environment as a stronger force in the industry.

Thank you for your investment in HP.
Sincerely,
Mark V. Hurd
Chairman, Chief Executive Officer and President

Comments (0)

Name

Email

Comment

smaller | bigger

Add Comment