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HP Invents

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					  HP Invents:
Financial Analysis for the Savvy
           Investor
            Corporate Objectives
n   Provide products, services and solutions of the highest
    quality and deliver more value to our customers that
    earns their respect and loyalty.
n   Achieve sufficient profit to finance our company
    growth, create value for our shareholders and provide
    the resources we need to achieve our other corporate
    objectives.
n   View change in the market as an opportunity to grow;
    to use our profits and our ability to develop and
    produce innovative products, services and solutions
    that satisfy emerging customer needs.
    Strategic Areas of Involvement
n   Imaging and Personal Systems Group (IPSG)
n   HP Financial Services (HPFS)
n   Corporate Investments
n   Technology Solutions Group (TSG)
    n Enterprise Storage and Servers (ESS)
    n HP Services (HPS)

    n Software
             Products and Services
n   Personal Computers and Access Devices
    n   Apple IPod – by HP
n   Notebooks
n   IT Infrastructure
    n   New Contract with NASDAQ
n   Global Services
n   Imaging and Printing
    n   Relationship with Dreamworks (Shrek 2, et al.)
    n   Relationship with National Gallery, London, to
        preserve Master Pieces
                Competitors
n   Dell
n   Lexmark
n   Xerox
n   Veritas
n   IBM
n   BMC Software, Inc.
                        Risks
n   The ability to develop, manufacture and market
    products and services that meet customer
    requirements for innovation and quality.
n   The ability to effectively manage the transition of the
    company’s products and services due to technological
    innovations.
n   The ability to continue to license and enforce the
    company’s intellectual property rights on which the
    business depends.
n   The stability of general economic conditions,
    including but not limited to, foreign currency
    exchange rate risk.
                The Old Guard
n                  Carleton S. Fiorina – Former
                   Chairman and Chief Executive
                   Officer (1999-2005)
n   Primarily responsible for the 2002 acquisition of
    Compaq
n   January 24, 2005 – Management reorganizes,
    redistributing some of Fiorina’s day-to-day
    responsibilities
n   February 9, 2005 – Fiorina Resigns
               The New Guard
n                   Mark Hurd – New Chief
                   Executive Officer and President,
                   as of 3/29/05.
n   Previously spent 25 years with NCR Corp.,
    culminating in two-year tenure as CEO
n   As CEO of NCR, generated 6.0 billion in
    revenue in fiscal year 2004, up 7 percent from
    ’03, and net income rose nearly fivefold to 290
    million.
HP Financial Data
           FY 2004 Revenue Report
                                     Actual Revenue ’05    Y/Y Increase
n   Storage & Servers                 4.047 billion       9% increase
n   HP Services                       3.815 billion       20% increase
n   Software                          240 million         18% increase
n   Personal Systems                  6.873 billion       11% increase
n   Imaging & Printing                6.067 billion       3% increase
n   HP Financial Services             555 million         26% increase




n   All increases are from FY 2003
             FY 2004 Profit Report
                              Profit      % Profit Inc. from ‘03
n   Storage & Servers       71 million       1.8%

n   HP Services             281 million       7.4%

n   Personal Systems        147 million       2.1%

n   Imaging & Printing      932 million       15.4%

n   HP Financial Services    45 million       8.1%
                     2005 Statements
n   Q1 2005 Revenue of 21.5 billion, a 10% increase from Q1 2004

n   HPQ estimates Q2 revenue to be between 21.2 – 21.6 billion

n   HPQ estimates Q2 non-GAAP Earnings Per Share to be 0.35 – 0.37
          HP v. Industry/Sector
                    HPQ     Industry   Sector   S&P
                                                 500
     ETR            14.18    17.20     28.25    30.26

  ETR 5 yrs         16.45    18.73     31.80    33.46
  Long Term         0.12     0.12      0.18     0.63
  Debt/Equity
Total Debt Equity   0.19     0.18      0.24     0.80
Dividend Payout     27.21    19.91     8.43     29.39
     Ratio
          The buzz on the street…
n   DELL stock is down 8% in the year to date
n   HPQ stock has seen an 11% increase since naming Mark Hurd
    the new CEO on March 29, 2005
n   DELL has scaled back their estimated 2005 growth rate
n   DELL’s goal is to achieve 80 billion dollars of annual revenue by
    2007… HPQ already exceeds that amount.
n   First Albany Analyst Services upgraded HPQ to a buy rating and
    estimates a $25 price target
n   HPQ was just awarded a 5 year contract with the United States
    Air Force
When Compared to Dell…
                         Quick Ratios
                             HPQ              Dell
n   Debt to Assets           0.5066            0.7206

n   Debt to Equity           1.0270            2.5800

n   Working Capital          14.313 billion    2.761 billion

n   Effective Tax Rate       14.18%            31.54%

n   ETR 5yr Average          16.45%            29.68%
                                              S&P Evaluation
                                                                     HPQ        DELL

n   Earnings and Dividend Rank                                       A-         B+

n   Fair Value Rank                                                  4+         5+

n   Investability Quotient                                           95         100

n   Technical Evaluation                                             Bullish*   Bearish**

n   Relative Strength Rank                                           84%        48%

n    * S&P Star Report has ranked HPQ bullish since March 2005
n   ** S&P Star Report has ranked DELL bearish since February 2005
6 Month Stock Performance:
    HP v. Dell v. DJIA
                  Comparisons
                      HP        Dell

Current Ratio:         1.5       1.2

Earnings Growth       37.7%     15.0%

PEG                   1.39      1.05

PE                    18.64     32.19

BETA                  1.78      1.64
                   WHY HP?
n   HP Makes More Things More Possible
n   HP is the leader in the Science of almost
    Limitless Possibilities
n   Because With HP -

          Everything Is Possible!
Questions??

				
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posted:7/25/2013
language:English
pages:21