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Hewlett Packard Company
(650)
857-1501
3000
Hanover Street
Palo
Alto, CA 94304
www.hp.com
Sales
$73.1
billion
Business Description
HP's
product and service offerings span information technology ("IT")
infrastructure, personal computing and other access devices, global services
and imaging and printing. Our products and services are available worldwide.
HP's operations are organized into six business segments: the Imaging and
Printing Group ("IPG"), the Personal Systems Group ("PSG"), the Enterprise
Systems Group ("ESG"), HP Services ("HPS"), HP Financial Services ("HPFS")
and Corporate Investments.
Imaging and Printing Group
IPG provides home and business imaging, printing and publishing devices and
systems, digital imaging products, printer supplies and consulting services.
Home and business imaging, printing and publishing devices and systems
include color and monochrome printers for shared and personal use,
multi-function laser and all-in-one inkjet devices, personal color copiers
and faxes, wide- and large-format inkjet printers and digital presses.
Digital imaging products include scanners, photosmart printers, and digital
photography products. Printer supplies include laser and inkjet printer
cartridges and other related printing media. Consulting services are
provided to customers to optimize the use of printing and imaging assets.
During fiscal 2003, IPG continued to deliver strong financial performance.
During the year, the segment recorded its highest ever full-year revenue and
profit performance, and in the fourth fiscal quarter IPG operating profit
surpassed $1 billion for the first time.
At the same time, IPG continued to innovate and release new imaging and
printing solutions. This focus culminated in the August 2003 launch of 158
new HP consumer products, a significant portion of which were IPG products.
This launch focused largely on integrating IPG products with PSG products
and, more specifically, on simplifying digital photography. The new products
also demonstrate our continuing innovation, from the introduction of the
first consumer 8-ink photo printer and wireless-capable PSC 2510 all-in-one
to our large Image Zone photo management software to the breakthrough design
of our ultra-thin Scan Jet 4600 see-thru scanner and our compact HP PSC 1350
flatbed all-in-one.
IPG also continued to introduce new commercial products, from refreshing our
leading laser printer line, to introducing more affordable color printing
capability for small and medium businesses, to introducing the first 24-inch
multi-format printing system for graphics professionals. During fiscal 2003
we also developed a strategy for aggressively entering the office copier
business and announced our plans to compete in this space.
Personal Systems Group
PSG provides commercial personal computers ("PCs"), consumer PCs,
workstations, a range of handheld computing devices, digital entertainment
systems, calculators and other related accessories, software and services
for commercial and consumer markets. Commercial PCs include the HP e-PC and
Compaq Evo desktop series and Evo notebook PCs, as well as the Compaq Tablet
PC. Consumer PCs include the HP Pavilion and Compaq Presario series of
multi-media consumer desktop PCs and notebook PCs. Consumer PCs also include
the Media Center PC. Workstations are provided for UNIX®1-, Windows®2- and
Linux-based systems. Handheld computing devices include the iPAQ series of
products that run on Pocket PC software. Digital entertainment systems offer
the DVD+RW drives as well as digital entertainment center products. UNIX® is
a registered trademark of the Open Group. Windows® is a registered trademark
of Microsoft Corporation.
During fiscal 2003, PSG made progress on a number of key goals. First, we
focused on reducing operating costs and increasing profitability. We managed
to reduce our cost structure significantly, and as a result we were able to
achieve segment profitability in three of our four fiscal quarters as well
as for the full fiscal year.
While focusing on our cost model, we also invested in improving our
competitive position during fiscal 2003. During the year, we continued to
develop our supply chain and direct distribution capabilities, and we
increased our revenue from direct sales 15% from the second half of fiscal
2002 to the second half of fiscal 2003. We also continued to innovate, both
in the consumer space, where we introduced new products such as our DVD
Movie Writer, Digital Media Receiver and Media Center PhotoSmart PC, and in
the commercial space, where we introduced new iPAQ handhelds with wireless
capabilities and biometric security, new PC blade servers and our Tablet PC.
Our improved cost model and competitive investments contributed to
improvements in our market position during 2003. During the year, we
increased our market share in the PC market in general and in notebooks, the
fastest-growing segment of the PC market, as well as in handhelds.
Enterprise Systems Group
ESG provides servers, storage and software solutions. Business critical
servers include Reduced Instruction Set Computing ("RISC")-based servers
running on the HP-UX operating system, Itanium®-based servers running on
HP-UX, Windows® and Linux and the HP AlphaServer product line running on
both Tru64 UNIX® and Open VMS. The various server offerings range from
low-end servers to high-end scalable servers, including the Superdome line.
Additionally, we offer our NonStop fault-tolerant server products for
business critical solutions. Industry standard servers include primarily
entry-level and mid-range ProLiant servers, which run on the Windows®, Linux
and Novell Inc. operating systems. HP's StorageWorks offerings include
entry-level, mid-range and enterprise arrays, storage area networks ("SANs"),
network attached storage ("NAS"), storage management software and
intelligent fabric technologies, as well as tape drives, tape libraries and
optical archival storage. Adaptive management software offerings include HP
OpenView and other management offerings. Telecommunications software
includes HP OpenCall and HP OpenView TeMIP solutions.
ESG focused on a number of areas during fiscal 2003. First, we focused on
reducing our operating costs and achieving profitability. In this regard, we
significantly reduced our breakeven point, which allowed our third and
fourth quarter results to improve significantly over the results of the
comparable prior year quarters on both a gross margin and an earnings from
operations basis, and we achieved our goal of recording a profit in ESG for
the fourth quarter.
At the same time, we continued to make progress in our product development
throughout our product categories as well as on a cross-category basis.
During the year, we completed key post-acquisition transitions of a number
of products, including moving all of our industry standard server offerings
from HP's pre-acquisition NetServer line to Compaq's Proliant line. We
continued to advance our transition toward Itanium®3 and away from our
AlphaServer line, develop SAN and NAS products and develop our software
business, including targeted acquisitions designed to provide additional
functionality to our software. In addition, we introduced our Adaptive
Enterprise strategy which leverages our individual enterprise products as
well as HP Services to provide solutions designed to help companies measure,
manage and design change by creating a tighter link between business needs
and IT infrastructure. As part of this launch, we introduced our Darwin
reference architecture, a standards-based framework for enterprise IT
architecture that combines components from HP and its partners in a modular
form designed to simplify change and reduces operating costs. Itanium® is a
registered trademark of Intel Corporation.
HP Services
HPS provides a portfolio of IT services including customer support,
consulting and integration, and managed services. In collaboration with ESG,
HPS teams with software and networking companies and local systems
integrators to bring solutions to HP's customers. Customer support provides
a range of services from standalone product support to high availability
services for complex, global, networked, multi-vendor environments. Customer
support also manages the delivery of warranty support through its own
service organization, as well as through authorized resellers. Consulting
and integration services help customers measure, assess and maintain the
link between business and IT; design and integrate the customers'
environments into a more adaptive infrastructure; and align, extend and
manage applications and business processes. Consulting and integration
provides cross-industry solutions in areas such supply chain, business
portals, messaging and security. Managed services offers IT management
services, including comprehensive outsourcing, transformational
infrastructure services, client computing managed services, managed web
services and application services, as well as business continuity and
recovery services.
HPS' primary focus areas during fiscal 2003 included growing our managed
services business, continuing to focus on cost containment measures and
driving more efficient utilization of our employees. During the fiscal year,
we made key progress against these goals and delivered strong financial
returns throughout the year. HPS established itself as a top-tier player in
the managed services business, winning significant outsourcing deals from
customers such as Procter & Gamble and Ericcson, among others. In customer
support, we extended our focus on areas such as PC lifecycle support and
multi-vendor support, and we developed our Global Delivery model to drive
delivery process transformation and major change initiatives on a global
basis in HP Services.
Financial Services
HPFS supports and enhances HP's global product and service solutions,
providing a broad range of value-added financial life cycle management
services. HPFS enables our customers worldwide to acquire complete IT
solutions, including hardware, software and services. The group offers
leasing,
financing, utility programs and asset recovery services, as well as
financial asset management services for large global and enterprise
customers. HPFS also provides an array of specialized financial services to
small and medium-sized businesses and education and government entities.
HPFS offers innovative, customized and flexible alternatives to balance
unique customer cash flow, technology obsolescence and capacity needs. HPFS
delivered a profit in all four fiscal quarters of 2003.
Compaq Integration
During fiscal 2003, we made substantial progress toward completing the
integration of our acquisition of Compaq Computer Corporation ("Compaq"),
which we closed during May 2002. During the year we made significant
progress on our product transition plans, substantially exceeded our cost
saving goals from the acquisition and gained market share across key
combined product categories. We also substantially completed the integration
of our corporate organizations and subsidiaries across the globe.
Ticker
HPQ
SIC Code
3570
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